The bank has encouraged financially distressed small businesses to approach the bank as soon as possible.
Michael Vacy-Lyle, the bank's Commercial Executive, says it will not be deterred from lending to small companies as long as they have solid business proposals.
Besides helping start-up businesses to draw up business plans, register a company and access funds, the bank's commercial division also provides small-business clients with continuous mentoring to ensure the sustainability of their enterprises.
“Our approach is not just that of providing finance, but rather one that will support our customers in building and growing their business,” says Vacy-Lyle.
The division has cautioned potential franchisees to be diligent when investigating investment opportunities, however. Franchisees should be wary of franchises that expand too rapidly without sufficient infrastructure.
“Potential franchisees must also do their research to understand the impact of the current economic conditions on the brands in which they are planning to invest,” says Vacy-Lyle.
FNB Commercial has developed a range of financial products designed to meet the different business needs. These include funding for start-ups, franchises, tourism and black economic empowerment transactions.
The division also provides venture capital to small businesses, something that banks have not provided historically. This means that a newly established business without a financial track record, but with a contract in place to supply goods and services, could receive funding if it is able demonstrate that cash flow will be emanating from such a contract.
“Cash flow is king. And cash flow lending, as opposed to balance sheet lending, is what is required in today's SME space because cash flow is what is ultimately going to make these small businesses sustainable,” says Vacy-Lyle.
