Not getting access to finance was a common complaint from small firms, Standard Bank chief executive Sim Tshabalala said yesterday.
Start-ups struggle to raise funds – bank chief
“Access to finance for small firms, particularly 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 conditions set by banks for the provision of 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].”
While small businesses might have valid business plans and good histories, he said, they often lacked capital or cash flow. “Because of the history of our country, the majority of people do not have their parent’s pensions or homes passed on to them.”
However, Tshabalala denied that there was a lack of funding for small and 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.” -Sapa