Finance providers need to address the unique challenges of the growing SME market in order to help keep South Africa’s economy growing. As a critical contributor to the country’s annual GDP and job creation, this sector is the largest by number of customers and covers a widespread geographical area, according to Gerald Burton, General Manager WesBank Corporate Division, South Africa’s leading asset-based financial solutions provider.
Burton says, “The types of customers who would fall into the SME sector, which by definition incorporates businesses with an annual turnover of less than R40 million per annum , could include, for example, a small courier company, a farmer, a engineering firms, as well as franchises.
“The SME sector is therefore to be found operating across the whole of South Africa, as compared to large enterprises, which tend to cluster in the urban economic powerhouses of the country. It is traditionally a difficult market to service from a relationship point of view, given both the size of the market and the location of these enterprises. It therefore presents unique challenges when it comes to asset financing, which must be addressed by finance providers in order to help keep South Africa’s economy growing.”
He clarifies that the SME sector represents the largest corporate segment by customer size for WesBank, and that servicing this section of the economy continues to be vital. “We understand that providing finance for these clients has a positive effect on job creation, as they mostly purchase assets for expansion purposes and with that comes job opportunities. Take the example of a courier company that has just opened a new depot and requires two delivery vehicles – these vehicles in turn require drivers.”
Burton says SMEs normally need to be able to access finance quickly to meet their business requirements and that WesBank’s ‘Instant Answer’ campaign has been aimed at these clients.
He clarifies, “This market segment comprises many start-up operations and young businesses as well as established businesses, but being spread throughout all corners of South Africa, it means that banks face challenges in servicing this segment of the market. Ideally, I imagine SMEs would want a relationship banking model but it does prove to be challenging to implement this from a cost perspective, as a relationship banking model is expensive.”
Burton notes that banks have tended to react to SME needs rather than provide some proactive solutions: “This proves to be a slow process, with much to-ing and fro-ing and a great deal of paperwork to process a finance application. But SMEs normally need to move quickly when making decisions. I would say two key things frustrate SME owners: the time it takes to approve their deals and the paperwork involved in obtaining credit and finalising the contracts. They are looking for simple solutions and banks that are easy to deal with.”
Burton says that given the time constraints under which SMEs operate, as well as their far-flung locations, WesBank has created a unique online solution offering instant answers to finance applications. Although the application process has been kept as simple as possible, a certain amount of information must be presented upfront to allow for quick and accurate decision-making.
“WesBank has put the bank in the hands of the customer, 24/7. Customers may log onto www.wesbank.co.za and apply for instant finance. Once they press send, we will instantaneously come back with an answer on the application. A WesBank expert will then contact the applicant within 24 hours to validate their information and finalise the application.
“As if that was not innovative enough, when the customer is ready to sign the agreements, WesBank will provide them with a one-time pin, which will allow them to log onto WesBank iContract where they can sign the contract online. Signing can also happen 24/7 wherever they are in the world.”
Burton concludes by offering advice to those intending to start up a business and needing access to finance: “I suggest you have a well documented business plan available with supporting financials, as our answer will be referred and we will need to properly assess your business plan. Overall, the best advice is always to have updated business plans and financial statements available to allow banks to make the best decisions in the shortest space of time.”
With over 40 years of experience WesBank has become the leader in asset-based finance solutions in South Africa. The company is focused on providing quality asset finance and fleet management solutions for a number of market sectors. WesBank’s asset finance portfolio includes Aviation, Agriculture, Commercial and Company Vehicles, Plant and Office Equipment, Public Sector and Franchise finance solutions. Visit www.wesbank.co.za for more information.