Preparing for funding should be an ongoing business discipline rather than a last minute exercise, says FNB's Louise Roux.
Image: Supplied
Access to finance remains one of the biggest hurdles facing South Africa's small and medium sized enterprises (SMEs), but businesses can significantly improve their chances of securing funding by strengthening their financial visibility and planning ahead.
According to Louise Roux, Product Head of SME Lending at FNB, many businesses struggle to obtain finance not because funding is unavailable, but because lenders do not have enough reliable financial information to assess their operations.
She said the lending landscape had become increasingly data driven, making it essential for businesses to maintain consistent financial records and banking activity.
"Lending has become increasingly data driven, making the quality and consistency of a business's financial footprint just as important as its funding need. Businesses that build this visibility are often able to access funding faster, secure solutions that are better suited to their needs, and create a stronger foundation for sustainable growth," Roux said.
Roux said business owners should treat funding readiness as an ongoing discipline rather than something to consider only when cash flow becomes constrained or a growth opportunity arises.
She encouraged businesses to keep financial information such as monthly sales, expenses, debt obligations and cash flow forecasts updated throughout the year.
"Funding readiness should be treated as a discipline, not a once off event. The easier it is for a lender to understand how the business makes money and manages its obligations, the easier it becomes to make an informed funding decision," she said.
Another key recommendation is separating personal and business finances. Roux said maintaining a dedicated business bank account creates a clearer picture of a company's financial position while simplifying tax administration, accounting and future funding applications.
She also highlighted the growing importance of building a visible and consistent financial footprint through everyday business activities.
Preparing for funding should be an ongoing business discipline rather than a last minute exercise, says FNB's Louise Roux.
Image: Supplied.
Modern lenders increasingly rely on data generated through banking transactions, card payments, invoices, supplier payments, accounting records and online marketplace sales to assess the health of a business.
"A clear digital trail can be especially valuable for SMEs that don't own significant assets or have a lengthy credit history. Over time, consistent transactional behaviour can support faster credit decisions, pre approved offers and access to funding that does not require traditional collateral," Roux said.
She advised entrepreneurs to establish relationships with lenders before large amounts of capital are needed.
Successfully managing smaller credit facilities while maintaining healthy banking behaviour can help businesses qualify for larger funding facilities in future.
Roux added that business owners should also monitor their personal credit records, as these often influence lending decisions for small businesses.
Choosing the right funding product is equally important.
Rather than focusing only on obtaining finance as quickly as possible, businesses should ensure the funding matches the purpose for which it is needed.
Short term unsecured finance may be appropriate for working capital requirements, while asset backed finance is often better suited to purchasing vehicles, machinery or equipment.
"The goal should not simply be to access credit. It should be to access the right type of funding, at the right stage of the business, for the right purpose," Roux said.
She said businesses that prepared well before approaching lenders enjoyed greater flexibility and stronger decision making.
"A business that understands its numbers and plans ahead is less likely to accept unsuitable or expensive finance under pressure. It can approach funding from a position of clarity, compare its options properly and decide whether taking on debt will genuinely strengthen the business. That shift, from seeking money urgently to using funding strategically, can make the difference between simply staying afloat and building sustainable business growth," Roux said.
Follow Business Report on Facebook, X and on LinkedIn for the latest Business and tech news.