Entrepreneurial and owner-managed South African businesses are increasingly looking for more value-added services and flexible financing arrangements from their lenders than prior to the economic crisis in 2008, Paragon Lending Solutions CEO Gary Palmer said this week.
Prior to the financial meltdown, clients primarily sought finance from their lender, but as market conditions deteriorated, the client’s needs changed and are now not only asking for access to finance if they require it, but also with assistance for buying and selling of property, Palmer explained.
They are also asking how changes in regulations affect their investments, how market conditions can affect their business practices and how lenders can assist them with a variety of other financial matters, he added.
Recent credit data from the Reserve Bank has indicated that growth in unsecured lending has slowed, while mortgage lending has only grown at less than 2% annually because banks have tightened rulesaround long term lending.
However, Palmer said South Africa’s economy still offered good opportunities for entrepreneurs and owner-managed businesses if they employed the right strategy and utilised diverse value-added services.
“Smaller businesses unfortunately do not have access to financial advice and support in the same manner as larger corporations do,” he deplored.
“Larger businesses are in the position to employ experienced staff who have established relationships with commercial banks, have additional financial advice from auditors and access to legal experts who have a thorough knowledge of that enterprise.”
As a result, Palmer said, private non-bank lenders, who are also not governed by the same regulations as the major banks, are in the ideal position to assist clients who require financial assistance via their value added services.
“Private lenders are usually entrepreneurs themselves and therefore understand and can identify with entrepreneurial challenges and how to respond to them.”
Palmer launched an impassionate plea to small business owners to always consult a professional lender to assist with cash flow forecasts.
“A financial oversight can potentially bring devastating financial losses if adequate planning, risk management scenarios and financial resources are not in place,” he said.
Photo by bdlive.co.za. Gary Palmer, Paragon Lending Solutions CEO