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.”