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Thread: Confirmed orders, approved finance, still no loan from the banks

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    Confirmed orders, approved finance, still no loan from the banks

    So I started this business idea, putting a beautiful website online to test the waters. It went surprisingly well, a lot of interest, and my first sale after not even 2 weeks, the business could have made a million rand turnover after not even 4 weeks of operation, 2500 visits on the website, google budget was exhausted every single day.

    So after the first sale was signed by the customer and approved by his bank I went to my bank to get a bridging finance of 450.000 for 6 weeks time.... declined....

    I went to the next bank, to the next, to the next, to the next, to sasfin... all declined. Declined despite orders, bank approvals of the client and all other things that could not have gone better. So what da hell is going on? What else can be done in order to convince a bank to lend me some money? I'm so annoyed right now.

    I don't want to post the website here but if anyone is interested I'll pm it.

    Anyone's got an idea what else I could do or should I just give up with the feeling that people like me won't get a chance in SA?

    I am at a T-junction now where I have to decide if I'll keep on trying or go back home.

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    Site Caretaker Dave A's Avatar
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    Quote Originally Posted by Wolf View Post
    I am at a T-junction now where I have to decide if I'll keep on trying or go back home.
    If it's worth it, don't give up.

    Have you tried getting credit from your supply side?
    Or how about a deposit from the customer?
    The trouble with opportunity is it normally comes dressed up as work.

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    Have you tried Merchant Factor? http://www.mfactors.co.za/

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    I can't provide any practical advice, but can perhaps explain why you aren't succeeding with the banks. They couldn't care less about your history of orders, outstanding orders or potential profits. They are not investors. They will only be interested in what assets you have that can act as collateral, so that the can sell them to get their money back if you don't repay the loan.

    So if you have no significant assets worth well over the R450k, you are wasting your time at banks and hence your frustration. Your recent business success or future potential profitability is irrelevant to them.

    Instead you need to find angel investors, venture capitalists or wealthy friends / family. Its no simple task. Alternatively be creative as per Dave's suggestions, but they too can be a challenge and have their limits.

    The next way is to seriously analyse why you need R450k. Its most likely made up of nice-to-haves, instead of needs. You could probably trade (and I am guessing here not knowing the details) using a lot less. It might initially limit your sales or profitibility, but at least you can get going. Be ruthless and cut this high setup cost down.

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    Diamond Member AndyD's Avatar
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    Venture capitalists would also be my advice but finance is something that rarely happens quickly, the reason these people have money to invest is because they're methodical as well as picky and choosy. Maybe consider approaching your main materials supplier with a view to a partnership or even a line of credit based on your firm orders.
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    Platinum Member sterne.law@gmail.com's Avatar
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    Be creative.
    Finance without the assets will always be a tough call. banks look for safety no matetr how much tehy advertise saying they are looking fro creativity.
    Perhaps 150 perople with R3000 - offer a return on investment that is worth the risk. many ways to structure.
    A South African movie is busy being financed like this, the public are putting teh money in.
    Tsotise was financed to a certain extent liek this - I think the actors themselves were investors, cant quite remember.
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    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

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    Diamond Member wynn's Avatar
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    Provided you are going to get paid immediately? get credit cards to the value you require from as many banks as you need to, just make sure you pay the minimum installment to avoid killer interest.
    Skin the cat this way and provided you pay the banks back before the end of the month you may get away without paying any interest at all.
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    Quote Originally Posted by Dave A View Post
    If it's worth it, don't give up.

    Have you tried getting credit from your supply side?
    Or how about a deposit from the customer?
    Those suppliers don't give credit, only cash before goods are released.

    Customer has to pay 10% deposit but that doesn't change the problem.

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    Quote Originally Posted by BusFact View Post
    I can't provide any practical advice, but can perhaps explain why you aren't succeeding with the banks. They couldn't care less about your history of orders, outstanding orders or potential profits. They are not investors. They will only be interested in what assets you have that can act as collateral, so that the can sell them to get their money back if you don't repay the loan.

    So if you have no significant assets worth well over the R450k, you are wasting your time at banks and hence your frustration. Your recent business success or future potential profitability is irrelevant to them.

    Instead you need to find angel investors, venture capitalists or wealthy friends / family. Its no simple task. Alternatively be creative as per Dave's suggestions, but they too can be a challenge and have their limits.

    The next way is to seriously analyse why you need R450k. Its most likely made up of nice-to-haves, instead of needs. You could probably trade (and I am guessing here not knowing the details) using a lot less. It might initially limit your sales or profitibility, but at least you can get going. Be ruthless and cut this high setup cost down.
    You are right with what you say about the banks, they don't really care about whether I was successful in the past or not.

    The 450k in this case only cover the import of 1 single unit, that's not cost for setup or anything, purely to finance the cost of import for this one item. I would probably be able to get orders for 2 or 3 units a month, so I'd need 3 times the money. However, if I could just start with 1 unit every 6 weeks it would be great. It takes about 5-6 weeks for one deal to finalize.

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    Quote Originally Posted by sterne.law@gmail.com View Post
    Be creative.
    Finance without the assets will always be a tough call. banks look for safety no matetr how much tehy advertise saying they are looking fro creativity.
    Perhaps 150 perople with R3000 - offer a return on investment that is worth the risk. many ways to structure.
    A South African movie is busy being financed like this, the public are putting teh money in.
    Tsotise was financed to a certain extent liek this - I think the actors themselves were investors, cant quite remember.
    Doesn't really work for this business since I need the cash to finance the import of a single item.

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