Banks pumping the money in
Banks have until the end of 2017 to invest R48bn in targeted investments, including black SMEs, transformational infrastructure and affordable housing. And they have far exceeded this amount
Entrepreneur Sipho Mdanda knows all about banks’ collateral requirements for getting a loan, having been a banker for 12 years. But he never expected to be turned down by his bank when he sought a R41m loan to buy a capital equipment supplier. Mdanda, the chair of Smith Capital Equipment, is one of thousands of black business owners who struggle to access bank loans because they lack sufficient collateral. In his case, he couldn’t provide an own contribution of 40% that his bank demanded and turned instead to the National Empowerment Fund (NEF), where he only had to front 5% of the loan’s value. Since the loan was approved in 2015 he has upped turnover by 6% and been able to add 20 new jobs to grow to 93 employees. Yet while Mdanda may have been turned down, banks say they have used innovative ways to fund black business owners who lack collateral while increasing lending to black SMEs, defined as black-owned firms with an annual turnover of up to R50m. The financial sector code com...
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