Personal Finance
South Africans have always experienced tougher economic conditions than other countries so its no wonder we are savvy when it comes to saving money. With economic conditions being tougher than ever before, many South Africans are cutting back on their expenses in order to save money and make it through the month. In fact, 55% of all households are still bearing the brunt of the strain the Cover-19 pandemic have put on their finances.
Here is a list of the top expenses South Africans cut back on in 2023:
Most consumers have cut back on luxury and big-ticket purchases like appliances, cars and luxury brands, delaying the purchases until their personal finances recover. They have also cut back on subscriptions and memberships like gym and mobile phone contracts.
On the flip side, households have put more money into emergency savings funds, into cutting down debt and into retirement funds. 85% of households are very concerned about how they will manage to pay their bills and debts going forward if things don’t improve.
If you find yourself in a real financial bind and need access to cash quickly, apply for one of our loan solutions today:
Personal Loans – got a clear credit record and need up to R150k fast? Apply for a personal loan.
Pension Bridging Loans – waiting for your pension or provident payout? Apply for a pension cash advance and get some of your money early to ease financial stress.
Loans Against Assets – use art, jewellery, handbags and luxury items as security for a secured personal loan. Get them back once your loan is paid up.
Loans Using Un-bonded Property – is your property valued at over R2 million and fully paid up? Use your home as security for an equity release loan of R1 million or more.
Business Loans
We all know how the old saying goes…when it comes to running a business, cash is king. Steady cash flow ensures your business can cover it’s overheads while continuing to grow. However, many businesses hit a snag when there’s a lag between forking out cash for overheads and receiving money in from customers. This can limit your ability to expand your business.
There are a number of ways to manage cash flow issues and ensure a steady stream of cash entering your business at all times.
1. Cash flow projections
Every business should put together cash flow projections as part of their annual budget. If your business is seasonal and has a few months where there tends to be a lull in business, cash flow projections can help you prepare and plan for dry spells.
2. Get paid sooner
Sometimes the issue is not a lack of sales but payment terms or customers who try stall paying. There are some simple ways you can try get paid faster which include:
- Early settlement discounts (e.g. 5% off when settling in 7 days)
- Take deposits at order placement if lead times are longer
- If customers don’t pay cash up-front, run a credit check before taking them on as a client.
- Put old stock on sale to try get rid of redundant inventory
- Send out invoices promptly and send frequent reminders
- Charge interest on late payments, ensure this clause is in your T’s and C’s.
- If the same customers tend to always pay late, change your terms to cash on delivery for any future dealings with them.
3. Get Smart About Overheads
It’s important to try and get most of your money in BEFORE your expenses are due to be paid out. If suppliers offer 30 day terms, don’t pay on day 15…pay on day 30 once you know most of your income will have hit your account.
If you can, pay your bills using a company credit card. Many offer up to 55 days interest-free which means you’re up to date with your suppliers and you’re not stretched financially. It’s important to stay in their good books. If you ever foresee payment having to be made late, let them know well in advance so they too can manage their cash flow.
4. Unsecured Business Loans
Sometimes even with fine-tuned cash flow projections, chasing payments and carefully managing overheads, businesses still run into cash flow issues. Nobody predicted the Covid-19 pandemic while budgeting last year, for example and despite their best efforts, many business owners find themselves in need of cash, NOW!
The quickest way to get business bridging finance is through an unsecured business loan. You can get access to a cash loan of between R50 000 up to R5 million in as quickly as 1 business day! There’s no easier way to get cash back into your business than by applying for an unsecured business loan with NHFinance. With flexible loan terms and fair interest rates, you can get the cash you need to pay your overheads fast!
5. Direct Debits
Subscription-based businesses or businesses that collect recurring payments often struggle to find ways to collect their payments effectively. One cannot rely on customers making manual payments as they try to skip payments or simply forget to do the EFT. This makes it very hard to manage your cash flow and grow your business as you never know what you’re going to be getting in. It doesn’t have to be this way, however. Businesses accepting recurring payments can sign up for direct debits to automate the process of collecting payments from customers on a set day every month. This eliminates the hassle for the customer and makes your income far more predictable. This solution is perfect for:
- Web hosting providers
- IT services
- Short-term finance companies
- Telecommunications companies
- Gyms
- Subscription-based businesses
- Etc
Business Loans, Personal Loans
With the cost of living in South Africa on the increase, our monthly salary can sometimes barely cover our expenses, never mind during a pandemic where salary cuts and retrenchments are plentiful. From groceries to medical aid, school fees and fuel, expenses add up fast and cash dries up even faster.
If you need cash urgentlyto pay important expenses like electricity, water and rent for example, where do you get it from? Most of us think, I’ll take out a personal loan, so I can get cash today. But the reality is, banks can take weeks or months to get a loan approved. And by then, it’s too late.
And after all that waiting, they could reject your loan applicationbecause you have a bad credit score or no credit history at all. You may think there is no hope to get a loan, but we will show you how to get a loan with no credit check!
Loan Against Movable Assets
If you’ve got valuable jewellery, art, vehicles, boats or other loose assets as security for a loan, you can apply and have cash in your hand in less than 24 hours! We offer a loan product that guarantees you a quick cash loanwhen you lodge your valuables with the lender as loan collateral.
The loan term is very flexible and generally clients choose to pay back the loanover 3 to 6 months, but the loan term can be shorter or longer. This is a very quick way to get a loanwith no risk to you. Your valuables are safely stored away and returned to you in the same condition as soon as your loan is paid up. For more information or to apply for a loan against assets, click here.
For more information on personal loans, property loansor business loans, please take a look around our website. We invite you to apply for any of our loan products should you meet each product’s minimum requirements.
Business Loans
For most business owners, figuring out how to get a business loan in South Africa can be a frustrating process. Many approach their banks directly and still get rejected after a long, drawn-out process, despite showing growth and great future prospects. Sometimes it feels like funding businesses is an impossible task but don’t give up yet, there are ways to secure pollen finance to expand your business!
What Do You Need From Your Business Loan?
Many SMME’s get rejected when applying for business funding because they are applying for the wrong type of loan! First figure out when you need the cash? Do you need it right now or in a few weeks or months down the line? If you’re waiting for a big invoice to be paid you’ll be able to pay back your loan in a matter of days. If you need the cash because your business is seasonal, you’ll need a very different type of loan.
Then ask yourself why you need the cash? What are you using it for? Here is a table with some common SMME expenses that owners seek out loans to cover…
When applying for business finance, make sure the institution you are applying to offer the type of business loan you are looking for.
How To Qualify For A Business Loan
If your business is in good credit, you’ll have a much easier time securing a business loan. If you have a large debtors book, big overheads and unpaid bills, lenders are going to be a lot more nervous loaning your business money.
If you own equipment, machinery, vehicles or your building, these can be considered collateral. They are assets the lender can claim if you default on your business loan repayments.
The longer you’ve been operating and the more financial records you’ve got, the better your chances of getting a business loan approved.
Some lenders have minimum requirements in terms of annual turnover and their various loan products. Check this carefully before applying.
Is It Hard To Get A Business Loan?
Through traditional means, yes! It can feel near impossible! It is easy to get an unsecured business loan with New Heights Finance. We have simplified the process to widen access to business loans for SMME’s.
We offer unsecured business loans to businesses older than 6 months with a turnover of at least R1 million in the last 12 months. Read more about how to get a business loan and we invite you to start the application process with us now.
Property Loans
How do I reduce my monthly bond repayments?
Are your bond repayments too high? Tenants not paying rent? Vacancies increasing? Sounds like you need to
reduce your monthly bond repayments. It is possible to reduce your bond repayments by up to 32% per month and free up cash to get your business cash flow out of the red.
This is how – Interest Only Bonds
Your bond repayment is made up of two main components: capital and interest. The capital amount is the loan amount you took out with your financial institution.
Interest is calculated as a percentage of a loan (or deposit) balance, paid to the lender periodically for the privilege of using their money (The Balance)
So, if you remove the repayment of the capital amount and only pay interest, then it is possible to reduce your
bond repayments by as much as 32%. The reduction in repayments is dependent on the interest rate you are currently paying your bank. The good news is, the interest rate is at an all-time low as a result of the economic turmoil caused by the coronavirus pandemic. Bad for investors, relief for property owners. Back to interest only bonds. The capital amount can be paid back at the end of the loan term.
Here is an typical example (subject to lenders conditions) that outlines the potential cashflow saving:
Traditional Capital and Interest Repayment Model
Bond R 50 million
Term 10 years
Interest Prime plus 1 % ( 11.25 % )
Repayment R 695 844 pm
Interest Only Model
Bond R 50 million
Term 5 years ( plus 5 years if account handled well)
Interest Prime plus 1 % ( 11.25 % )
Repayment R 468 750 pm
This equates to a 32% improvement in cash flow – R 227 094 pm x 12 = R 2 725 128 pa. Capital Repayment – R 50 million at year 5, or rollover if the lenders is happy to refinance.
Types of properties
The ideal types of properties for this financing solution are income-producing commercial, industrial or
residential properties (blocks of flats, hotels, student accommodation), valued at between R 20 million and
R80 million.
If you have a property valued at more then R 80 mill, it is possible to structure the funding in an alternative
manner. The property must have been owned for at least 2 years and have some equity available.
Risks
As a borrower, your risk is reduced because cashflow is improved. With a positive cash-flow you have
funds to buffer your business against any unforeseen circumstances, such as COVID, other natural or
man-made disasters.
How may I use the cash saved?
The cash you will have freed up can be used for other investments or as the property owner requires. The borrower
must, however, remember that at year three to five, the capital has to be paid back. This can come from
the savings made in cashflow, from bank loans, other businesses or even the Interest Only Bond holder,
could refinance or roll-over the loan.
How long does it take to set up the Interest Only Bond?
The lenders need all supporting documents to prepare a submission. The proposal is submitted to the credit committee for assessment. If all in order, then a valuation of the property is done and the final term sheet is presented to you. This normally takes 2 to 3 weeks, measured from when ALL the requested supporting documents have been received.
What are the costs?
The interest rates charged are market related. Rates from prime plus 1% to prime plus 3% are available. This is risk dependent. The current bond on the property would need to be cancelled and a new bond registered. There may be bond cancellation costs and there will be bond registration costs. There are also the normal administration and raising-fee costs.
- Main Advantages
Companies wanting to grow their property portfolios can use this finance facility to purchase more
property.
- If there is equity in the property, it is possible to release this equity.
- Cash-flow is improved. Reduction in monthly payments of up to 32 % are possible.
- Reduced interest rates. Some property owners are paying rates in excess of prime plus 5 %. There are
savings to be made using these commercial bond facilities.
For more information visit https://nhfinance.co.za/interest-only-bonds/
