Running an agribusiness requires a long-term approach. This is because of its intrinsic requirement of seasonality, the need to be agile and adaptive, as well as the importance of access to financial means. This is true even for new era or emerging farmers, taking into consideration that there comes a time in their businesses when one requires a cash injection to keep up with intrinsic needs to industry developments.
However, access to funding remains one of the critical challenges faced by small and emerging business, which is why engagements such as Farming in Heels are of importance in trying to bridge the gap through access to information and networking solutions.
During the Farming in Heels seminar held at Matanbandou in North West last week, the key theme emphasized by Standard Bank, as one of the sponsors, was how women should go about when applying for bank assistance in running their businesses. Senior Agribusiness Manager at Standard Bank, Keneilwe Mabona remarked to Mzansi Agriculture Talk that their interest in the event was motivated by the fact that it represents women inclusion in agriculture, who make a key contribution to the agricultural industry and are the backbone of transformation.
“We can’t move forward if we leave women behind, who significantly contribute to the growth of the sector. It is important to us as a financier that we partner and support women with funding and various other tools required in their agribusinesses, by either helping them to start or expand their operations through our enterprise development products and services,especially where you find that there is shortage of collateral or own contribution,” said Mabona.
Moreover, Mabona shared that as a bank, they’ve come to understand that most farmers say when they come to the bank, they don’t have required documents because of lack of access to information.
“So, it’s important for us to provide them with information that there are other measures in place in the bank through our enterprise development division,where we can be able to assist their businesses. However, it goes without saying that you have to start first and then we partner with you in your business to grow it, she said.
Mabona explained that amongst the critical factors the bank looks for when working on an application, accurate record keeping, this is essential because in the case of prospective investment in a business, one must understand what it is they are doing and be able to evidently show the business scope when acquiring funding.
“We have to be able to see your financial records and statements on paper.Make sure that at least for the first 12 months of your business, the records are in order so that when you approach a financier, they can understand the business dynamics and operations. It is furthermore important that the balance sheet is up to date. In the absence of financial statements,we can also look at your management records. Each case is looked at and based on merit,” Mabona further explained.
Agricultural lending is collateral-based. In the case of approaching the bank for a production loan, land is not viewed as security, but we take session of your income of the crop that we financed.
“So, if you have an offtake agreement that proves you’re going to sell your product for a certain amount, you may not have to worry about other factors,but in a case where we have to fund land or to put some fixed improvements on the land, then that is when the land as a collateral becomes important,”she said. One needs to understand that this doesn’t mean collateral is not important, it means that it is not the only aspect considered. All things considered, the viability and sustainability of the business is scrutinized, and in the case of a crop production loan, then the crop becomes security.
