FAMILY businesses seeking bank financing must demonstrate how they will generate enough cash to meet their obligations.
This was made clear by Standard Bank Eswatini Chief Executive Mvuselelo Fakudze, who told the 3rd Family Business Summit at Happy Valley Hotel yesterday.
He said banks ultimately lend against cashflows, making it critical for entrepreneurs to understand exactly how their businesses make money, cover expenses and generate the funds required to repay loans.
According to Fakudze, banks needed to establish whether a business could cover its operating expenses and still generate sufficient free cash flow to service a loan.
Fakudze stressed that an entrepreneur’s understanding of the business was just as important as the financial statements and cash-flow projections submitted with a loan application.
He challenged business owners to take ownership of their numbers instead of relying entirely on their accountants.
“We lend against cashflows. We want to see where you could generate those cashflows, whether you can cover all your expenses and whether there is sufficient free cash flow to repay the loan.
“The passion behind the person applying for that loan, there is no financial statement or cashflow projection that’s going to convince us more than how well you understand your business. If your accountant understands your business better than you, you have not started running a business,” Fakudze said.
Fakudze maintained that entrepreneurs should be able to explain how their businesses were structured, how they generated income and how the numbers added up.
However, he noted that banks also had a responsibility to protect the money entrusted to them by depositors, making lending a delicate balancing act.
He explained that a bank needed to ensure that funds remained available to depositors while also providing financing to businesses that could demonstrate their ability to repay.
Fakudze said Standard Bank understood the realities of family businesses, drawing from his own childhood experience working in his family’s enterprises.
He recalled having to report to his father’s bakery at 5am to oversee the loading of bread and count every loaf before it left the premises, while also helping manage other family businesses. His responsibilities sometimes continued until late at night at his mother’s filling station, which closed at 11pm.
Fakudze said this experience had shaped the bank’s approach to working with entrepreneurs. He acknowledged that not every loan application would succeed, particularly because banks operated within strict regulatory and credit requirements.
“That money doesn’t belong to the bank. A bank is just a custodian. When we talk about family businesses, we talk about real-life experiences. This is why, as a bank, we try to position ourselves as a bank that listens to your story and finds a way to partner with you and your businesses.
“We are a very regulated entity, so unless we have all the documentation and we’ve ticked all the boxes, we need to ensure that we satisfy the credit process before we can lend,” Fakudze added.
Despite these requirements, Fakudze assured businesses that Standard Bank remained open to working with entrepreneurs and supporting their growth.
He encouraged entrepreneurs to present their businesses with confidence and conviction.
Fakudze also highlighted the contribution of family businesses to economic activity and government revenue, saying their growth was important to the wider economy.
He noted that Standard Bank was making use of digital platforms to improve access to banking services, while relationship bankers remained available to guide clients through the credit process.
The bank also offers investment products ranging from savings accounts to offshore investments in multiple currencies.
“We are here as a bank to say we support you. Tell your story with passion and conviction, and if your story convinces you strongly enough, it will convince a bank,” he assured, and then added “we would like to work with you and grow with you. When you grow, the bank grows.”
