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.
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