Innovative solutions help boost SME sector

If you’re having no luck in raising spare capital for business development because your banks aren’t prepared to play ball, trade finance might keep you firmly in the game, according to Dean Burscough of Lombard Trade Finance – a subsidiary of Lombard Insurance Company. “The concept of trade finance is certainly not new,” he told FTW, “but it has not received the exposure it deserves. “However, with increasing emphasis being placed on the role of small and medium business being the major driver of growth and development in South Africa, this is set to change.” Young and developing businesses have historically found their growth potential severely hampered by the limited opportunities to access capital and traditional bank finance. This, explained Burscough, is mainly due to the owners’ inability to inject sufficient equity into their businesses and the availability of suitable collateral to secure bank finance. “We can alleviate this problem,” he added. “By adopting a far more business-minded approach to conventional lending, we can devise innovative solutions to raise the additional working capital which is the lifeblood of any growing business.” With Burscough’s company working as a subsidiary of Lombard Insurance Company – a specialist insurance company operating largely in the guarantee and credit insurance market – he felt it formed an excellent credit foundation on which to build the trade finance section of the group. “We are capable of providing our clients with invaluable assistance and insightful advice,” he added. “This goes beyond the clichéd ‘financial partner,’ which most of the traditional banks advertise themselves as providing.” He defined the trade finance contribution being essentially used to fund the inventory and raw materials of businesses involved in trading, wholesale distribution and manufacturing. The finance for this takes the form of the establishment of letters of credit and payments to local and overseas suppliers – including advance payments and deposits. According to Burscough, the benefit and advantage of trade finance is additional working capital, which alleviates cash flow constraints and increases business capacity. It further unlocks the value tied up in existing assets. “Our facility is revolving and flexible,” he said, “and can be structured to meet the specific requirements of the deal.”