BANKS - GATEKEEPERS OR OBSTACLES?

Article by listed accountant - Graeme Scott

Banks – If we have to believe the advertisements they are “the bank for entrepreneurs, by entrepreneurs!” and “can being good make a bank great?” and did you know that you can contribute to good causes without any cost to yourself? By the way the caps were left out on purpose.

If you have R2 and want to borrow R1, no problem. They will take your whole R2 as security and give you R1 as a loan on which you get charged interest and costs. This must make sense, surely? It has to, because that is the way we work. Don’t we? But if you have R1 and need R2 to help your business grow, you are in trouble. Serious trouble. Firstly you will hear about your business running at a loss and thus, not creditworthy. Then after you explained at length that depreciation is not an actual cash flow item, they pound you into submission with heaps of paperwork. Obviously you get your accountant to do this, and they (we) do not work for free. I wish we could, but hey, I have an appetite too! Then after three weeks or so of anxious waiting, you get a call from someone called the commercial manager, who speaks to you like a god to a lowly slug, telling you that bad luck buddy, you are too poor and we can not see you making a success in the future with your piddly little business!

Also if you do eventually manage to scrounge out a facility and have an unfortunate incident where a client pays you late, and you go over your limit on that facility… How did you all of a sudden go from “we love you, our favourite client” to “now we will screw your credit rating up till kingdom come!”. Scary indeed.

The rest of the money lenders want half your business, and of course your house, as security before they spot you a tenner. Then of course they also have the right to tell you how to run your business. Luckily if you fail, then it is all on you and definitely not them!

How do we create an atmosphere conducive to entrepreneurship without available funds??

 Who has the solution? Please help and become enormously wealthy! (Except if you are going to need funding of course!)

Article by listed accountant - Graeme Scott