How To Leverage Debt As An Enabler

Sep 8, 2016 Blog  Debt , Growing your business

leveraging debt as an enabler in article pic.


As an SME owner it is notoriously difficult to obtain an unsecured loan from the bank. The banks want to have security and give you access to a loan with collateral, should you not be able to make the monthly repayment. On the alternative finance market, however, there is light at the end of the tunnel. There are finance options for SME’s.

SME’s are vital to the growth of the South African economy as they are responsible for job creation. The NDP forecast states that by 2030, 90% of the jobs in the country will be created by SME’s and emerging businesses. However, not every entrepreneur or SME owner has the privilege of expanding or improving their business without taking on debt to do so. Choosing to raise finance through debt is a decision many SME owners and directors have to make at some point to fulfil their growth ambitions. Sufficient working capital is key for your company’s financial health and not having enough of it can have a detrimental impact on the future of your business.

When growing your business and sales start increasing, you are often required to purchase assets. An asset purchase loan can be used to buy new machinery or vehicles. This type of loan is a prime example of a great way to spread the costs of acquiring an expensive new asset. Fixed monthly repayments can help you plan your cash flow in advance and enable your business to grow even further.

Expanding your range of products, moving into larger premises or hiring more staff could assist you in taking your business to the next level. Obtaining a loan to assist the growth of your business can help you take advantage of new opportunities and turn your ambitions to reality.

If you have existing company debt, a debt consolidation loan helps you reduce costs to make your finance for your business more manageable. Your financial planning could be easier by reducing the number of monthly repayments and enable you to pay less interest.

Despite the tightening of bank lending, SME owners have more options than ever before for financing their businesses. The most important factor is to ensure that the opportunities and restrictions of the type of finance chosen align with the company’s long-term aspirations.


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