The coronavirus pandemic hit the South African economy hard and small businesses have suffered the most.
With many challenges still to face, access to working capital has been difficult. According to alternative fintech institution, Merchant Capital borrowing money can be a very strategic move.
“The best time to borrow is when you can use that working capital to enhance your chances of future success and make sure you can pay it back with ease,” said CEO Dov Girnun.
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A Sandton-based company, Girnun offered some tips to business owners:
Plan your financial future
He said if there was anything that Covid-19 had taught business owners was that they could never plan for everything. But as a business owner, there were many things one could foresee.
“Once you understand what needs to be done in your business, then you can take the necessary steps to understand what kind of loan is best for your business,” said Girnun. He added that looking at things long-term would allow for a clear investigation to look at different options.
Build up a track record
Obtaining access to loans can sometimes be complex. Girnun said lenders were cautious and a credit history was often required. “Your current financial situation determines long-term lendability, it is important to get in the game while you are able to manage that debt and pay it off quickly.”
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He also mentioned three good reasons a loan would be helpful.
Setting up shop: If you’re starting a new business you will need to create an infrastructure before the business is generating any revenue.
New location: While your business is booming you may consider expanding. A loan is a good idea so that the existing branch doesn’t have to carry all the risk.
Upgrades and inventory: For new systems and equipment, Girnun said a loan could be the answer.
