• 10 tips to find bargains

    Susan Erasmus gives advice on how bargain hunters can get the most bang for their buck.

  • Inside Labour

    Labour's bitter breaches need to be seen in historical context, says Terry Bell.

  • Rich getting richer

    Economists differ on how to tackle the chasm between rich and poor, says Leopold Scholtz.

All data is delayed
See More

Small firms struggle to get finance

Nov 21 2012 13:28 Sapa


Related Articles

Where to fund your small business

Small firm finance, big headache

Gordhan: Banks must be more inclusive

Gigaba calls for entrepreneur boost

'Access to finance not only hurdle'

Ramaphosa: Innovation the key

Johannesburg - Not getting access to finance was a common complaint from small firms, Standard Bank chief executive Sim Tshabalala said on Wednesday.

"Access to finance for small firms, particularly for start-ups, continues to be a challenge," Tshabalala said in Johannesburg at a Black Management Forum panel on job creation.

This was because small businesses often had weak balance sheets and few assets. While Tshabalala recognised the need to provide loans to new businesses, he defended the stringency of providing financing.

"The most important thing a bank does is that we have to make absolutely certain the loan gets repaid. If it does not get repaid, banks become insolvent.

"People say we should be taking risks, [but] we should be making absolutely certain that when you go to the bank to draw your hard-earned salary [the funds are there]."

He said that while small businesses might have valid business plans and good histories, they often lacked capital or cash flow.

"Because of the history of our country, the majority of people do not have their parents' pensions or homes passed on to them."

Tshabalala denied there was a lack of funding for small to medium-sized enterprises (SMEs).

"There's a myth that there's a shortage of funding for SMEs. If anything there's a surfeit of funding."

Tshabalala added that developmental finance institutions (DFI) could work with private banks to provide more financing for new businesses.

"We could use them in the nature of venture capital. Banks could leverage [DFI funding] nine times," he said.

Political analyst Steve Friedman agreed that banks had to ensure their loans were secure but "we can look at risk in different ways. A lot of this stuff has cultural baggage."

He said that in discussion on business, there was a perception that business people dressed the part and worked in the corporate world, but ignored people starting businesses in townships.

Friedman noted that banking units devoted to providing services to townships were amongst those first scaled back when the recession began in 2008.

He also poured cold water on a question about the implementation of the National Development Plan, saying it had only been intended to begin discussions on policy.

"I wish we could stop talking about implementing the NDP. It's 450-pages long. I don't think there's a single person in this country who could agree with all its ideas," Friedman said.

*Share your experience of setting up your own business, or simply ask a question. Our business panel can put you on the right path.

Follow Fin24 on Twitter, Facebook, Google+ and Pinterest.


Read Fin24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Company Snapshot

Brought to you by BizNews

More from BizNews

We're talking about:


Johannesburg has been selected to host the Global Entrepreneurship Congress in 2017. "[The congress] will ensure that small business development remains firmly on the national agenda and the radar screen of all stakeholders, the Small Business Development minister said.

10 most expensive cars In the world

This is car porn at its best!


Luxury living

Seven of the most expensive children's toys ever made
5 millionaires turned murderers
The youngest billionaires in the world and how they made it
Watch: Flying first class has never been this luxurious!

Money Clinic

Money Clinic
Do you have a question about your finances? We'll get an expert opinion.
Click here...

Voting Booth

How do you see your boss? He/sheis:

Previous results · Suggest a vote