ABSA business loans are a product of the ABSA bank. The ABSA bank is a subsidiary of ABSA Group Limited, a JSE listed company with a presence in 12 countries across Africa. In South Africa, it is one of the biggest banks. The bank offers a wide range of services to its clients, including loans. These loans vary from home loans, to personal loans and business loans. As a business owner, you can access up to different types of loans, depending on your needs and ability to meet the terms and conditions of the loan.
KZN Small Business Loan
The KZN Small Business loan package has a total amount of R 500 million, according to ABSA. The loan is part of the Black Economic Empowerment. Therefore, it is only available to businesses with 51% black ownership and above, with the only exception being the Agricultural sector. It has the following features:
- Qualifying businesses can get any loan amount from R50 000 to R15 000 000.
- They can make a monthly repayment for a repayment period of up to 5 years.
- The amount of approved loan is determined by how much risk a business poses.
Qualifying Criteria
According to ABSA, in order to qualify:
- The business must be operating with the aim of making profits.
- A business must prove that it will have future revenue and thus, the ability to repay back the loan, usually shown in the business plan.
- The business must have been in operation. The bank will asses its previous cash flow and financial performance.
- The business must be registered in South Africa.
- The person applying must have the skills required for the industry and must also be a South African.
- The business must have at least 51% black ownership.
- A business transaction account must be an ABSA bank account. If it is not, the business must move its account to ABSA bank.
- At least one business owner must be managing the business and controlling its day to day operations.
Requirements
ABSA bank will require the following documents from the business:
- A business profile and proof of business address
- A tax clearance certificate. FICA documents for both the applicant and the business.
- The CVs for all members, directors, and owners of the business as well as their educational and skills development certificates.
- A copy of the purchase order document.
- A copy of the lease agreement.
- A BEE affidavit.
- The past financial records of the business: the Income Statements and Balance Sheets for the business.
- Bank statements for the last 3 to 6 months.
- At least a year of cashflow projections for the business.
SME Assist Loan
The SME Assist Loan is given to businesses that have been awarded a purchase order or contract from a public sector entity after they qualify. To apply, download the application form, fill it and submit it at your nearest ABSA bank branch. Upon approval, the loan is not paid to the business owner. It is paid directly to the supplier. It has the following features:
- Qualifying businesses can get any loan amount from R50 000 to R 3 000 000.
- They can repay for a period of up to 5 years.
- The amount of approved loan is determined by how much risk a business poses.
Qualifying Criteria
According to ABSA, in order to qualify:
- The business must get credit approval.
- A business must be a small to medium sized enterprise (SME) in accordance with the definition of the Department of Trade and Industry (DTI).
- The business have a valid contact or purchase order.
- A business owner must be a South African who resides in South Africa.
- The business must prove that it will have future profits from the assessment of its previous financial performance. Hence, be able to repay the loan.
- Must be able to provide business registration documents such as articles of association
- The business owner must have the skills required for the industry and must also be a South African residing in the country.
- A business must have at least 51% black ownership.
- The business transaction account must be an ABSA bank account.
- A business owner must be managing the business and controlling its day to day operations.
ABSA Small Business Finance Options
Property Finance
ABSA Business Property Finance loans are divided into two, Commercial Property loans or Agribusiness Property Loans. Commercial Property Loans include:
- Development Loans
- Investment Loans
- Vacant Land Loans
- Mortgage Backed Loans
- Lease Discounting Loans
Agribusiness loans, on the other hand, are of one kind. They have a repayment term of up to 10 years with flexible terms. The Agribusiness mortgage loan account comes with additional benefits. It allows tax free savings at the prevailing bond rate, 24 hour access to capital and the ability to buy assets at prevailing bond rates.
Commercial Vehicle Finance
Commercial Vehicle Finance is a loan offered to businesses for purchasing automotives including those in marine and aviation under specialized finance options. These loans have repayment terms that last for between 12 to 60 months.
Types of ABSA Business Loans
There are three types of ABSA Business Loans:
- Term Loan, which is a medium to long term loan with a fixed repayment schedule. Medium term loans last for between 1 to 3 years while long term loans last for between 3 to 25 years.
- Business Revolving Loans allow flexible withdrawal.
- Business Overdraft Loans let the business make payments and purchases using an overdraft on the ABSA account if required.
Valid Reasons to Get ABSA Business Loans
- ABSA business loans can finance acquisitions of a business, trading assets, or target company shares.
- They can also be used to finance projects and expansion.
- They can also be used to refinance or restructure debt.
- Lastly, they can be used to finance an exit strategy.
Conclusion
ABSA bank supports start-ups and SMEs with the ABSA Business Loans. They also support the Black Economic Empowerment (BEE) initiative. These opportunities are ideal for budding and growing businesses that can position themselves well enough to get a loan. The contents of this article should help you realize how these loans can help your business and how to get them.
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