News
Issue No. 50 - December/ /
SMEs should spread borrowing risk
SMEs should be looking at dealing with more than one lender to manage their debt risk and ensure they don’t ‘max out’ their relationship with their bank, according to a leading mortgage adviser.
Smartline Blackwood Personal Mortgage Adviser, Cathy Anderson, says in the past 12 months, many
SA business owners have discovered the dangers
of dealing with only one lender in a tightening
economic climate.
“It’s not uncommon for me to meet clients who have all their personal and business finance needs with the one lender,” Cathy says.
“While you might get a slightly better deal if you have everything in the one place, you are locked into that relationship.
“When things go wrong with that relationship,
or you need to call on more assistance only to discover your bank won’t lend you any more, you have nowhere to turn.
“You always want to have more than one port of call, as I know some local businesses have discovered in recent months.
“I always advise my clients to have various aspects
of their finances with several different lenders as it
gives more scope for access to more money if and
when it is needed.
“In the same way that you wouldn’t have your entire share portfolio invested in one company, dealing with only one lender can be a dangerous strategy.”
Cathy says a ‘one lender’ finance strategy is just as dangerous for businesses looking to grow as it is for those facing difficulties.
“Each bank has its own product range but they don’t always have the right product for you and your business,” she says.
“There may be products more suited to your needs
in the marketplace, but your lender isn’t going to tell
you that.
“Traditionally, banks also take an umbrella approach to a client’s business and personal finances – they try to cross-collaterise as much as they can, which can mean you can ‘ma...
