Small firm finance, big headache

Oct 08 2012 13:37
Fin24 user EVR the Optimist writes:

WHY are banks so reluctant to fund small business, when we are constantly told that this is South Africa's salvation?
I was driving in my car yesterday, listening to Cape Talk when I heard an advert from a well-known bank inviting entrepreneurs with the dream of owning their own business to apply for funding.

I threw back my head and laughed long and hard, because I am currently going through the most nightmareish ordeal at the hands of the very bank extending the hand of "friendship" so to speak, and I would like to share my story.
My wife and I own our own small business. We identified another ideal opportunity and site that perfectly suited our skills, and we are absolutely certain that we can make it a roaring success.

I set the wheels in motion and approached the small business manager of the bank that currently holds our small business account, and has done so for the past 10 years.

They also, I might add, hold our (very small) bond, my credit card account, my personal account, our will and they were also the bankers of a previous profitable business I owned for six years. I have also financed (and fully paid for) vehicles through them. 

I have banked with them for the past 15-odd years and I banked with one of the institutions that was amalgamated to form the current bank. All in all, I have had a clear credit record for over 30 years.
I was given a list of documents required to set the process in motion which I duly supplied on August 1, and was told that I could expect an answer within three to 14 days.
And so the saga began.
Fourteen days later, with still no word from my small business adviser, I made the first phone call of many, many more.

After initially being told that I did not have to provide a business plan (my wife and I individually have 27 years of experience in the business we needed funding for) it suddenly became a requirement and, "could you please provide it as soon as possible to avoid any hold-ups".

I compiled a business plan within three days, outlining our project exactly and providing a detailed explanation of what we intended doing, and was told that we should have an answer within seven days.

After seven days I again started phoning, often leaving messages for my SB adviser to please contact me, which he never ever did and I would then have to phone again later to enquire about the status of the application, never getting an actual concrete reply.
While all this was going on I was also dealing with the potential landlord, who was pressing me to sign a lease because we are the preferred tenants. Obviously, they want to rent out the space and can't wait for me forever.

I was under stress because there are other parties interested in the premises, and I was anxious that my dream was going to be snatched from beneath my nose.

The SB adviser was constantly assuring me that "they will definitely approve your loan", while providing me with absolutely nothing in writing despite my repeated requests for him to do so.

Eventually the adviser told me that my loan had been approved - huge sigh of relief from me that the saga was finally drawing to a close and a big, big mistake on my part. "When will the money be released?" I asked.

"I'm definitely sure you will have the money within seven days," said my "adviser". Seven days later, I again phoned to find out what is going on as I had not heard a word from the adviser and was again fobbed off with vague reassurances.
To cut a long, long story short, every time it came close to the actual payout yet another piece of paper was placed in front of my wife and I to sign, with the usual tired old line "we are very close now" being tossed in our direction to placate us.

It is now day 66 and yesterday we once again had to sign yet another surety or whatever it was, I have lost track amidst an ever-growing pile of paper to borrow the princely sum of R220 000.

We were told that we will be contacted today to sign the final document before the money is released.

I have placed my usual phone call to find out what is happening, left a message because my small business "manager" was yet again on the phone and unavailable and yes, you've guessed it, still no return call three hours later and as Friday is a short day, there is absolutely no chance of a positive outcome today.
My question is: why does the bank waste its money on advertising that it wants to help entrepreneurs and small businesses, when it makes it close to impossible to actually acess the funding?

If I was not absolutely certain of the future success of this venture, I would long ago have thrown my hands up in desair and simply given up. I feel sorry for any budding young entrepreneur with a dream who has to go through the stressful, soul-destroying ordeal that I have just been through.

One thing is certain, this experience has given me the determination to pay back the loan as soon as possible and cut all ties with this bank.
Mark Twain said: "A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain."

  - Fin24

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