When applying for a loan, find the financial institution that will give you the best deal for your needs. Financial institutions are bound by the new Credit Act, so they have rules to obey when assessing your business.Most banks now have a central lending or credit committee that approves loans. Your local bank manager no longer makes his own decisions. However, his input is still important, and if he thinks your application should be approved, that will count for something. Don’t forget the Land Bank! It was created to help farmers and is an arm of government. Know your credit rating as determined by the credit bureaus. Sometimes a person or business has unknowingly been blacklisted for not paying an account, and this will negatively affect the loan approval. Or a court judgement has been taken against a person or business without their knowledge. No loan will be approved with an “unsatisfied judgement”. This means the offender couldn’t pay the outstanding amount or reach a deal over repayment.
It’s possible to check the credit bureau database on the internet. Do this at least once a year. If you apply for the loan in your name (not advisable as the risk is great), you will need identification, a utility bill proving where you live, and proof of income. If the business has traded for some time, the bank must assess the balance sheets. If you apply for the loan in the business’s name, the bank will need balance sheets, proof that the business is a legal entity, and all director (or CC member) details. The person making the application will also need a letter from the business showing that they have permission to apply for the loan on behalf of the legal entity. A legal entity is either a cooperative, a (Pty) Ltd company or a CC. An updated statement of assets and liabilities, cash flow projection, budget and what could be offered as surety (or security) should be ready for presentation.Next, write up a simple business plan to present with your application. This will show the lender exactly what’s happening with your business, and show your understanding of business.
Many business owners lack the necessary skills needed for success, so a professional approach will help to ensure that a loan is granted. If you have any records of previous repaid loans, take those with you. Have all of your documentation with you to speed up the loan application process. To order your credit report, call the TransUnion Interactive Call Centre on 0861 482 482 or visit www.mytransunion.co.za. Susan Pletts runs WanyukaConsultants in KwaZulu-Natal, which provides various services, including farming training and mentorship for emerging farmers in KZN. Contact her on 082 572 3724, or [email protected]. |fw