Standard Bank Eswatini Chief Executive Mvuselelo Fakudze has advised family businesses seeking bank financing to demonstrate their ability to generate enough cash to meet their obligations. Speaking at the 3rd Family Business Summit at Happy Valley Hotel, Fakudze emphasized that banks lend against cash flows, making it crucial for entrepreneurs to understand how their businesses generate and manage money. This understanding is vital for securing loans and supporting business growth.
According to Fakudze, banks need to establish whether a business can cover its operating expenses and still generate sufficient free cash flow to service a loan. He stressed that an entrepreneur's understanding of the business is just as important as the financial statements and cash-flow projections submitted with a loan application. Fakudze challenged business owners to take ownership of their numbers instead of relying entirely on their accountants.
Fakudze highlighted the importance of entrepreneurs being able to explain how their businesses are structured, how they generate income, and how the numbers add up. He noted that banks also have a responsibility to protect the money entrusted to them by depositors, making lending a delicate balancing act. A bank needs to ensure that funds remain available to depositors while also providing financing to businesses that can demonstrate their ability to repay.
Drawing from his own childhood experience working in his family's enterprises, Fakudze said that Standard Bank understands the realities of family businesses. He recalled having to report to his father's bakery at 5 am 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 11 pm.
Fakudze acknowledged that not every loan application would succeed, particularly because banks operate within strict regulatory and credit requirements. He explained that Standard Bank is a regulated entity that must satisfy the credit process before lending. Despite these requirements, Fakudze assured businesses that Standard Bank remains open to working with entrepreneurs and supporting their growth.
Fakudze encouraged entrepreneurs to present their businesses with confidence and conviction. He also highlighted the contribution of family businesses to economic activity and government revenue, saying their growth is important to the wider economy. Standard Bank is making use of digital platforms to improve access to banking services, while relationship bankers remain available to guide clients through the credit process.
The bank offers investment products ranging from savings accounts to offshore investments in multiple currencies. Fakudze assured businesses that Standard Bank is committed to supporting them, and encouraged them to tell their story with passion and conviction. He added that if a business story convinces the entrepreneur strongly enough, it will convince the bank, and that Standard Bank would like to work with and grow with family businesses.
Key points
- Cash flow is crucial for securing bank financing for family businesses in Eswatini.
- Standard Bank Eswatini CEO Mvuselelo Fakudze emphasizes the importance of entrepreneurs understanding their businesses and being able to explain how they generate income.
- Standard Bank remains open to working with entrepreneurs and supporting the growth of family businesses in Eswatini.
