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

[Justloadit]

Regarding the collateral, I was actually thinking the bank would use the imported item as collateral, the market value is about 550-600k, is not very difficult to sell, especially for 450k, but they say they don't use the financed good as its own surety. Totally not understandable for me but that's what they say.

It is simply because of the fact that they do not know who the equipment belongs to. So using the equipment as collateral may have a problem that the ownership is not yours until certain conditions are met, which would put the bank at risk in the case of a non repayment of the loan. Secondly, the bank deals in money, not trading in goods. IN the case the deal goes sour, it now makes the bank responsible for getting it's own money back.
w
hat we tend to forget is that the bank trades in money as it's stock.

[Wolf]

It is simply because of the fact that they do not know who the equipment belongs to. So using the equipment as collateral may have a problem that the ownership is not yours until certain conditions are met, which would put the bank at risk in the case of a non repayment of the loan. Secondly, the bank deals in money, not trading in goods. IN the case the deal goes sour, it now makes the bank responsible for getting it's own money back.
what we tend to forget is that the bank trades in money as it's stock.

Ownership is mine because I have to pay upfront, however, it is true that they are trading with money. On the other hand, it would be my responsibility to get them their money by either keep on paying the installments and/or finding another buyer for the good, which is not more difficult than selling a car or anything worth 450k.

Since the buyer has paid a 10% deposit and finance is in place and approved by his bank, what intention would he have to cancel the deal and lose his deposit? The worst thing that could happen is that the buyer dies before the good is delivered. But then I still have the deposit AND the good, AND I am able to settle the installments.

[Justloadit]

Ownership is mine because I have to pay upfront, however, it is true that they are trading with money. On the other hand, it would be my responsibility to get them their money by either keep on paying the installments and/or finding another buyer for the good, which is not more difficult than selling a car or anything worth 450k.

Since the buyer has paid a 10% deposit and finance is in place and approved by his bank, what intention would he have to cancel the deal and lose his deposit? The worst thing that could happen is that the buyer dies before the good is delivered. But then I still have the deposit AND the good, AND I am able to settle the installments.

We tend to forget, the bank deals in money. All decisions are based on money. They are not in the business of selling equipment.

[Dave A]

Those suppliers don't give credit, only cash before goods are released.

Then perhaps you should be treating your clients in similar manner?

That said, I do understand there's a difference in payment terms (or the lack of it) when it comes to importing. But ultimately your potential client would face the same hurdle, surely.

EDIT: I see you've made a plan. Not ideal, but as long as it all works out...
Sounds like you've done as much as you can to mitigate risk though.

[Wolf]

I made sure the risks are reduced to a minimum. It will all show hopefully today if it will work out. In business you have to take risks sometimes. As long as you don't ignore that and make sure about things it will all be good. My father has been in international trading his whole life, if he weren't sure it's all planned properly he wouldn't get involved.

[Wolf]

My parents will get the results on Monday, please hold thumbs for me!

[Blurock]

Purchase Order Finance

In the USA businesses use Purchase Order Finance in a situation like this. All they need is a confirmed order from a reliable purchaser to make it a self-liquidating transaction. Very often in South Africa an opportunity is missed because of lack of working capital and the reluctance of banks to assist SME's (despite their fanfares at the start of every financial year).
Purchase Order Finance considers the repayment ability of the purchaser (Debtor) and relies on the integrity of the supplier as well as the debtor. The transaction is very much like a trade finance deal where the purchaser gives confirmation of an irrevocable order. The financier or bank will take ownership of the goods purchased and manage/control the import end to end with delivery directly to the purchaser.
The purchaser (debtor) pays the financier on receipt of the goods and the mark up (profit) of the transaction is paid to the supplier after deduction of fees and interest.
When approaching a bank, it is of no use talking to someone at your local branch. Approach the business banking section and make sure that they understand what you are talking about. If you do not speak to the right people, you will never get the right answers. There are some private companies and investors that may be able to assist in this regard.

[Jenfor]

SO BusFact is saying that 'if you have no significant assests worth well over R450K' you don't stand a chance in hell of acquiring a loan/bridging finance and the likes from banks? Well here is the thing - I have assests well over that. I am applying to take out the excess money that I have paid into my home loan and to take the homeloan back up to the original contract price but I have been declined? What the hell?? My homeloan is actually in advance, I have never missed one payment and now I have to supply them with my great grandmother's uncle's DNA! I have resided in the same property for over 20 years, do not have credit other than the homeloan and the usual utility bills- oh IS THAT my problem? I don't have any traceable credit, I don't owe thousands to any creditors? Can somebody tell me what needs to be done here? I have supplied the bank with a set of financials for the period 1 March 2010 to 28 Feb 2011, income and expense statement for the last 3 months,e a projected income and expense statement for the next 6 months, salary slips, bank statments - what the hell else do they need from me? Now they are calling for my drawings.........a sole proprietor..... my expenses ARE my drawings!

[Dave A]

Banks have always been a bit otherwise when it comes to personal finance for sole proprietors
I'm not sure why exactly, but I suspect it's because it messes up the risk evaluation formulas.

My suggestion - convert to a company to get the business side out of your personal finances.

[Blurock]

Hi Wolf.Forward me your website and I will see what I can do.

[Nigel Hamilton]

Hi Wolf.Forward me your website and I will see what I can do.

Yes likewise... I am ready to invest in a new business venture