Two Cape-based companies have joined forces to ensure that small and medium-sized enterprises (SMEs) will have greater access to funding. SME funder Retail Capital and asset finance firm First Asset Finance have combined their expertise to offer more funding and support to small businesses across South Africa, that are growing, despite tough economic times.
“Any business that invests in growth will survive despite the state of the economy,” says Retail Capital CEO Karl Westvig. “Tough economic times by no means indicate that you should stop investing in your business.”
“In fact, it’s even more reason to make changes to boost your business’s growth ‒ whether it’s refurbishing, acquiring new assets, expanding your premises or building on the marketing of your product.”
He adds that small businesses need more help available to help them build and grow. Currently, according to Retail Capital CFO Guy Hosking, banks are very tight on the rules and the support they provide for small businesses. The company has provided almost R2 billion in loans to date to around 10 000 local businesses, predominantly retailers and restaurants.
With the economic climate, Hosking says, access to funding is becoming more difficult for SMEs in a time when they need it to boost their businesses and, by default, the economy.
“If banks are not helping to boost SMEs with funding, it is up to non-bank lenders to take up that slack,” explains Hosking.
“Ultimately, our goal is to have a range of funding products to service all SMEs. Adding this new finance product is a big step in that journey.”
The partnership will provide SMEs with funding options in various areas of their business. Westvig explains that the products from both companies complement each other seamlessly, with First Asset Finance offering a natural product extension to Retail Capital’s portfolio of funding and insurance options supporting SMEs based on their cash flow.
Retail Capital’s core funding product is a shorter term, unsecured and more expensive product, while First Asset Finance offers secured funding for the long-term at a lower cost. That said, both are very beneficial for business. According to Westvig, a restaurant, for example, might need funding to put in a new kitchen which would be asset based, but they might also need cash flow funding to grow in the interim.
Director of First Asset Finance Mark Dowson says that the company has provided asset finance to more than 2500 business owners throughout South Africa to date. Historically, First Asset Finance has predominantly served the medical sector, but the company took a strategic decision to replicate its product for other industries such as manufacturing, packaging, engineering and printing. Dowson and company Director Jason Sive believe that the logical next step is to expand into additional sectors. This is where Retail Capital comes in.
“By joining the Retail Capital team, this now provides us with a springboard into their vast network of customers and partners who require an asset based finance product to enable their businesses to grow,” Dowson says, adding that on a strategic level the partnership is bound to accelerate both companies’ growth paths as, whatever type of business you are in, at some point you are going to require asset finance in your business.
“The SME industry in South Africa has until now been under-served by larger banks and financial institutions. The traditional incumbents adopt a ‘one approach fits all’ which continues to fail in providing service and a genuine understanding of the needs of SMEs. We genuinely relate to the constraints the SME sector is faced with and we work with our customers and suppliers in achieving their strategic goals by providing a flexible finance solution approach.”
The transaction between the two companies took place late last year, and will see them sharing a combined office space from the end of February. The merger is set to accelerate growth for all parties involved, while offering exceptional value to the SME market across all sectors.
In addition to the merger, Retail Capital will also be adding a new insurance product that will provide a built-in safety net for all business partners. This will include business interruption cover in the event of a fire or flood.
Since 2011, we have provided businesses with innovative, flexible and convenient alternatives to traditional business loans. Business owners still identify access to working capital as the single biggest challenge that they are faced with. Being responsible for 50% of the country’s GDP and contributing to over 65% of employment, we are devoted to partnering with small to medium-sized businesses to grow the South African economy. This is where we can help and we are proud to have partnered with more than 5000 SMEs in providing funding of more than R1.25 billion to date.