A Fin24 user laments the difficulty of finding capital to
fund his business. He writes:
Accessing enough working capital from my bank has proven
I've been financing my business with my pension money. Now
my pension money is finished.
I have equity of R1m in my house. This hasn't yet convinced
my bank to increase working capital currently sitting at R35 000.
Our experts answer:
Tienie le Roux of Business Consult and independent business consultant Anton Ressel
agree that accessing working or other capital for entrepreneurs is extremely
Many mainstream financial institutions are loathe to fund
working capital, especially for an extended period of time, said Ressel.
Adds Le Roux: "Neither the banks nor the government
agencies are helpful.
"Established businesses may have an easier time to get
loan capital but young businesses do battle to convince lenders. Banks are even
"Banks and other lenders look at a few things before
they would lend capital to a business.
"The two most important things are security (it seems
that you may have that), but the other aspect is the payback ability of the
"To convince a bank you will need a comprehensive
business plan, with pro forma balance sheets and income statements for at least
three years into the future, as well as a cash flow analysis for the same
"Many young businesses may have cash flow problems in
the beginning, as profitability is under pressure and sales are lagging.
"The investment in stock and the financing of debtors
also take its toll.
"The best advice is to prepare the business plan and
live it even if you do not get the capital from the bank. The discipline and
dedication that you will bring into your business will be a great help for you
in the future. I wish you all the best with your business!"
Ressel suggests the Fin24 user contact SEFA and find out
whether he qualiies for any of their finance schemes.
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