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Financing for the SA businesses: Owners should look for non-bank lenders!

by , 31 March 2015
South Africa's economy indicates a challenging year for businesses. And that means your business may have to change it focus. Especially when it comes to financing.

Banks are most likely to apply more rigid rules when it comes about requirements for financing from business owners. But that doesn't mean you don't have options...

Are banks still the best places for SA businesses to get financing?

The Paragon Lending Solutions poll (which surveyed property investors and business owners on the feasibility of businesses obtaining loans from banks and non-bank lenders), showed that more than half of the participants experienced delays in obtaining bank finance and this caused them to lose out on deals or to obtain less favourable terms.

Moreover, as the same study shows, 55% of participants needed short-term (6-12 month) interest-only loans previously and were willing to pay a premium for a 36-hour credit decision and an access facility with flexible repayment terms.

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It is also said that potential interest rate increases at the end of 2015 will impact the domestic economy negatively. This will add stress on local business owners and add more pressure on them.

'Business owners need to make financial provisions for the current economic climate in order to take advantage of business opportunities, in light of the fact that banks may impose stricter lending criteria in 2015. Therefore, owners needing funding provisions to protect their businesses from the damaging financial effects of market fluctuations, will need to look to sources other than banks to do so next year. This means seeking financial advice and sourcing additional funding from alternative sources who will meet their requirements quickly and reliably.', Gary Palmer, CEO of Paragon Lending Solutions, explained, cited by the same source.

Since, for instance, many property developersare finding themselves in a cash flow crisis and are unable to take advantage of opportunistic purchases because banks will not approve the loan in time, Palmer advises the property buyers and business owners, confronting such difficulties in securing finance, to try and find alternative lenders who could issue them with a formal bank guarantee within seven days.

'Our average turnaround time is 7 to10 days for a guarantee to be issued. Most reputable lenders should have similar terms. Once the transfer occurs then the lender can work with the client to secure long-term bank financing,' added Palmer, quoted by the same source.

In case you look for a new source for financing your business or you fear an economic hurdle, the result of the above study may be very useful for you.

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