1. THE STARTUP OFFER
2. HOW DOES YOUR BUSINESS QUALIFY
3. DOCUMENTS NEEDED TO APPLY
4. DEBIT ORDER SWITCHING
5. ASSISTANCE WITH OTHER BUSINESS SKILLS
• Business Plan
• Coaching and Mentorship
6. FINANCIAL ASSISTANCE
• A guide to applying for finance through Nedbank Small Business
• Do you need another form of Financial Assistance
7. KEY QUESTIONS AND ANSWERS
8. HOW TO APPLY
   

THE STARTUP OFFER

FREE TRANSACTIONAL BANKING FOR UP TO 2 YEARS WITH A STARTUP LOAN OF R100 000

Apply for a minimum of R100 000 finance from Nedbank for your NEW* FRANCHISE or STARTUP business and for the next two years, you’ll get:

•  FREE unlimited cheques
•  FREE unlimited debit orders
•  FREE unlimited cash deposits; and
•  FREE unlimited internet banking

This could mean a saving in bank charges of up to R60 000 in your first year of operation alone!

This offer will help you in two of the most critical areas for a new business, namely:

• adequate capitalisation;
• controlled overheads

*’’New’’ is defined as not yet in operation, or in operation less than 2 years.

DOES YOUR BUSINESS QUALIFY?

This offer is available to small-sized franchisees and businesses that are in the initial phase and which are projecting an annual turnover of up to R5 million.

The following points apply:

• Your business must be a real business in the legal sense (sole proprietor, partnership, close corporation, or limited company)
• You must have been in operation under 24 months

TERMS & CONDITIONS

You must open a Nedbank current account.
You must finance a minimum of R100 000 through Nedbank using the following financial tools:

• a term loan;
• vehicle finance;
• plant and machinery finance;
• a home loan; and/or
• a commercial property bond

Even if you are currently banking with another financial institution, simply moving one or more of the above accounts to Nedbank will help qualify you for the R100 000 finance – and therefore for the enormous savings offered in our free banking for 24 months.

• After 2 years normal banking charges will be negotiated and applied
• Normal credit criteria will be applied to all applicants
• The free banking offer will come into effect only once the finance is in place
• As long as financing is in place and qualifying criteria are met the free banking will apply for the first two years

WHAT DOCUMENTS DO YOU NEED WHEN YOU APPLY

The following documents are required for businesses currently in operation (first column) and those that still need to start up formally (second column).

DOCUMENTS REQUIRED FROM YOU WHEN APPLYING FOR THE STARTUP OFFER 

DEBIT ORDER SWITCHING

To enable us to assist you in moving your debit orders we need the following:

• Details of your current account that is currently being debited
• Details of all your existing debit orders, i.e.
   - the names of companies currently debiting your account;
   - the amounts that are currently being debited to your account;
   - the dates of the debit orders concerned

You will be required to complete a debit order mandate form that will allow us to change your debit orders on your behalf.

You should keep your old account open at the other financial institution until all debit orders are going through the Nedbank account.

Please note that debit order amendments could take up to three months to be finalised.

At no time can Nedbank guarantee that all debit orders will be changed, as some beneficiaries will only act on direct instruction from you.  The Debit Order Hub will contact your beneficiaries and where they are unwilling to change the debit order, the Debit Order Hub will advise the branch to alert you.

ASSISTANCE WITH BUSINESS SKILLS

WE’LL HELP YOU WITH OTHER BUSINESS SKILLS

Business plan

You must have written a comprehensive business plan with full capital expenditure requirements and cash flow projections so that we can understand the potential you see in your new business.

For guidance on how to complete a business plan click here!

There you’ll find information that will help you write your own professional business plan. You can also talk to a Small Business Services banker in a Nedbank branch, or call the Nedbank helpline on 0860 116 400 with any questions.

Coaching and mentorship

You can access high-level but practical business coaching and mentoring via our connection with our associates Business Partners and Sizanani.  Call the Nedbank helpline on 0860 116 400 or speak to a Small Business Services Representative with any questions or for more information.

FINANCIAL ASSISTANCE

A GUIDE TO APPLYING FOR FINANCE THROUGH NEDBANK SMALL BUSINESS SERVICES

At Small Business Services we believe that the future economic well being of the South African economy rests to a large extent in the hands of small and medium businesses.

Different amounts and different types of financing facilities are catered for by different financial institutions. It is the objective of Nedbank Small Business Services to make an expert contribution to the SME sector - thus helping to create vitally needed jobs, improve the level of skills and generate wealth.  The purpose of this document is to clarify the basic requirements for raising debt finance through Small Business Services, as well as to provide an insight into the application process.

• Debt Finance Division

 - Medium Term Loans
 - Instalment Sale Agreements
 - Overdrafts 
 - Other, e.g. Guarantees, Letters of Credit

• Amount:  Facilities from R 50 000 to R3 million are the norm
• Period:  Term facilities are for a maximum period of five years.  Overdrafts are reviewed annually
• Options: Capital moratorium and balloon payment facilities are available under specific circumstances
  
• Rates:  Interest rates are linked to prime, and comparable with industry norms
• Introductions to all other facilities offered by the Nedbank group are available

GETTING STARTED WITH YOUR APPLICATION

THE DECISION

The rewards of running your own business are numerous: control of your own time, the ability to determine your own income, and the independence of being your own boss.  However, not every individual is suited to this form of employment. The dismal statistic of small business failures is a sobering fact.  Look at your reason for wanting to move into this venture, if you just can’t find a job, think twice, if you see a gap in the market, you are probably on the right track!

Do you believe you have the necessary tenacity, self-confidence, enthusiasm and commitment to hard work, the technical know-how, as well as family support and personal resources required for this type of business?

THE GROUNDWORK

Once you have decided that you have the personal attributes required to make a success of your business, your next step would be to prepare yourself for running your own business, and then prepare a plan for your business. You should consider attending one or more training courses on small business management; these are run by many educational institutions.  Discussions with business advisors, management consultants or trade associations together with market research on population, competition and industry would form the basis of your business plan.

In an application for finance, a business plan serves two purposes.  Firstly, as a management tool it forces the applicant to arrange his or her thoughts logically in such a way as to know exactly what the business entails, and to anticipate potential problems, for example cash shortages.   Secondly, as a selling document, it is a tool used by the applicant to sell the company, its management and the products / services to the financial institution.

The business plan should create an impression of professionalism, be concise and factual, and include all the relevant details to enable the reader to form an opinion as to the viability of the enterprise.  It should assist the investor or financier to understand the long-term implications of the company’s intentions, to form an opinion as to whether targeted growth is within management’s capacity and to assess whether capital requested is sufficient to meet current and short term requirements.

In your business plan remember:  Projections should be realistic and conservative rather than overly optimistic.  Sales frequently rise more slowly than expected, whereas costs seem to rise more quickly.  Remember to include all costs, including VAT even where it may be claimed back at a later stage.  Common pitfalls which have foiled many a small business include: Not enough capital; shortage of cash, incorrect sales forecasts, inadequate market testing, weak business plans, bad pricing, failure of delegate responsibility, lack of objective advice, rushing to the market and finally the ego of the owner, a refusal to recognise mistakes.

FINANCE

An accurate cashflow projection is absolutely critical, as it provides a clear picture of the financial viability of the business, as well as the ability of the business to service any additional debt.  It can also be used as a tool to determine the amount of debt required and the period over which it is required.  An application for a certain amount of finance should be justified by a cashflow projection.  Also be aware of the fact that in the first year or so, few businesses are able to afford drawings which match an entrepreneur’s previous salary.  Budget to live frugally for the first few years as the business grows.  Remember, you reap where you sow!

COLLATERAL

Once an application for finance has been approved, an “OFFER OF BANKING FACILITIES” must be accepted by the applicant before further processing can take place.  No finance can be made available to the applicant before the conditions of the offer letter have been met.  Included in the offer letter will be a list of the collateral or security to be perfected. 

The following securities are standard and are required over and above other securities offered:

Personal guarantee - By all members /shareholders of the Close Corporation / Company, unlimited

Cession of Loan Funds - By all members / shareholders of   the Close Corporation  / Company, in favour the bank

Life Assurance Policy - For at least the full value of the facility over the life / lives of the key person or persons.  The life cover of each policy is to independently equal or exceed the value of the facility.

Examples of additional security which could be offered to secure a facility:

Additional forms of security could be:

• A guarantee from a third party
• Personal surety of a third party
• A buy-back agreement from a supplier
• And a cession of a lease agreement

In certain exceptional circumstances early release of finance can be negotiated.

CHECK LIST TO REDUCE PROCESSING TIME

To facilitate smooth processing of the application, the following list of issues will help to prevent misunderstandings, and ensure that funds availability is not unnecessarily hampered.
No funds will be made available until all necessary documentation has been received.  The following documents will be required, where applicable:

COPIES OF THE FOLLOWING DOCUMENTS WILL BE REQUIRED
For each partner / member / shareholder / director / surety

1. Personal information statement
   
2. Copy of identity document
   
3. Copy of marriage certificate
   
4. Copy of ante-nuptial contract
   
5. Personal banking details (bank, branch, account no)
   
6. Curriculum Vitae

For the establishment of a new business / franchise

1. Business Plan (as per guidelines)
   
2. Copies of relevant licenses, permits, agreements
   
3. Quotations for movable assets to be financed
   
4. Registration documents (Founding statement / Partnership agreement / Memorandum and articles of association)
   
5. Copy of the franchise agreement
   
6. Franchisor status form (incl. disclosure document and financial statements)
   
7. Twelve month projected cash flow statement
   
8. Copy of the lease / rental agreement for the business premises
   
9. Copies of orders or letters of intent

For the purchase / expansion of an existing business / franchise

1. Copy of offer to purchase or deed of sale
   
2. Copies of bank statements (last six months)
   
3. Copy of asset register / list of moveable assets
   
4. Trade or customer references
   
5. Last two sets of audited / certified annual financial statements
   
6. Up-to-date management accounts
   
7. Debtors age analysis
   
8. Creditors age analysis

CHARGES:

The following charges (where applicable) will be for the account of the applicant:

1. Khula Indemnity fee of 3%, payable annually (for participating applicants) at the beginning of each period of indemnity and yearly thereafter
   
2. Attorney’s fees for registration of bonds on property, equipment or other assets.  This fee is payable upfront on acceptance of Offer Letter, based on an estimate of final charge
   
3. Property valuation charges
   
4. Applicable revenue and other related legal costs stamps on all contracts

1. The time period before approval of an application varies, it takes two to three weeks to complete an in-depth analysis of the business, and submit a full presentation for approval
   
2. Once the application has been approved, finance will only become available when the conditions of the offer letter have been met.  This includes the perfection of all securities as well as the completion all necessary documentation.  Always build in lead-time
   
3. Where fixed property is involved as security, try to give yourself extra time, say at least 6 to 8 weeks, as sometimes unexpected delays in registrations of bonds occur

RELATIONSHIP MANAGEMENT

A close relationship develops, as the success of Small Business Services depends on the success of its customers.  Frequent visits to the business premises and regular analysis of key financial indicators form the basis of this relationship.

A critical component of the ongoing relationship is the submission of monthly MANAGEMENT ACCOUNTS to Nedbank Small Business Services.

This should not be seen as policing, rather as part of relationship building.  These accounts should be produced anyway for effective management.  A free flow of information would facilitate easy decision-making especially where additional finance is required for expansion purposes, or to meet important orders or merely to see the business through difficult times.

Management accounts can be prepared in the format most convenient to the accountant of the business, but should at least show the monthly turnover, gross profit, expenditure, and profit or loss for the period.  A fictitious example is as follows:

EXAMPLE XYZ CC
INCOME STATEMENT FOR THE PERIOD TO 31 JULY 199_

A Balance Sheet should accompany the Income Statement on a monthly basis, as the two reports together provide important insight into the performance of the business.

It should be noted that if Management Accounts are not received on a monthly basis, Nedbank Small Business Services reserves the right to send in consultants to prepare these accounts.  The costs incurred will be for the account of the applicant.

At the end of each financial year, Annual Financial Statements are required to be produced and sent to Small Business Services in accordance with the Offer of Banking Facilities.

FRANCHISING - AN OPTION

Franchising:
Franchising is rapidly becoming South Africa’s fastest growing business format.  It is a business method whereby a license is granted by the franchisor to the franchisee, allowing the franchisee to market the franchisor’s services or products.  Included in the agreement are the elements that make the franchisor’s business successful - the business name, logo, trademarks, management expertise and support systems.  The franchisee pays a franchise fee for these privileges, and contributes to a share of other costs such as advertising.

• Market-tested products and concepts
• Administrative and accounting advice
• Operations manuals
• Advertising and marketing support
• Bulk purchasing of products
• Ongoing training and support
• Research and development
• Peer group synergy

• Conservation of capital
• Rapid system of expansion - more establishments quickly and efficiently
• Risk spreading  -  reduced fixed overheads  -  investment is spread between both parties
• People and staffing  -  transfer of labour-intensive activities to franchisee

• Well-known trademark  -  a proven business system, training and ongoing advice
• Low-risk ownership with full support
• Set-up expenses optimised
• Risk of failure dramatically reduced
• System-wide advertising and promotional support
• Cost-effective buying prices of products and services
• Better loan financing opportunities

• Clear identity with a distinctive and recognisable brand name
• Proven and tested business concept, financially viable with efficient and effective operational systems
• Easily transferable systems
• Profitable to the franchisor based on:
     Upfront franchise fees
     Ongoing management service fees and royalties
     Mark-up on supply of goods
• Attractive to the franchisee because of:
     Monthly income
     Return on investment

NEDBANK SMALL BUSINESS SERVICES

BUSINESS PLAN GUIDELINES

BACKGROUND

A short summary of :
   - History
   - Shareholders / Owners
   - Description of the business and its markets
   - Reason for requiring financial assistance

MAIN PRODUCTS AND SERVICES
   - Describe the main products or services
   - Describe their competitive advantage in the market
   - Impact of future developments on the success of the product
   - Detail on the development cycle of new products / services
   - Price
   - Threat of substitute products

MANAGEMENT BACKGROUND

HUMAN RESOURCES ISSUES

BUSINESS ENVIRONMENT

SUPPLIERS

UNIONS

Is the staff unionised?
What contingency plans are in place to deal with labour / productivity disruptions ?

PLACE
   - Where is the business situated
   - What is the viability of the site

CUSTOMERS
   - Who are they?
   - Threats of using alternative supplier

MARKETING INFORMATION
DEFINE THE INDUSTRY / SECTOR IN TERMS OF :
Characteristics
Proposed / existing market
Major clients - current and future
Likely trends in the industry / sector
Application of your product / service

THE MARKET
Segments targeted :
What are the major areas aimed at and where are they situated?
How are the above-mentioned areas changing and developing?
Customer success in each segment targeted :
Customer profile and buying habits
Success already achieved with customers or interest shown to date
Are there seasonal variations?
Critical elements (reliability, quality, price, service, etc.)

COMPETITION
Who are your current and possible competitors in the future?
Appraise your current and possible future competitors
What are their strategies?
How will you succeed?
How will your competitors respond?
How do you compare to your competitors?

MARKET ACTIVITIES
Plans for :
   - Promotion and advertising
   - Pricing
   - Distribution
   - Geographic penetration

SALES
How will sales be achieved?
How will prospective clients be identified and converted into customers?

OPERATIONS AND PRODUCTION
The production service/service process
Suppliers, what are the likely developments?
Key production/operating advantages
Critical aspects i.e. parts, machinery, etc.
Cost of production and impact of volume on costs
Machinery required
Present facilities and future plans

COPIES OF CONTRACTS, TAKE - OFF AGREEMENTS TO BE SUPPLIED

FINANCIAL POSITION
Two year cash flow forecasts, with cash flow assumptions
Audited financial statements for an existing business
Latest available monthly management accounts for an existing business

FINANCE REQUIRED
How much is required?
When is it required?
What will it be used for?

OWN CONTRIBUTION
What will be contributed? Cash, equipment
How much will be contributed?

SECURITY INFORMATION
What is available as security?
How much is it worth?

DO YOU NEED ANOTHER FORM OF FINANCIAL ASSISTANCE?

Finance can also be made possible through our association with Khula Enterprise Finance Ltd to assist businesses that do not qualify for loans due to a lack of or inadequate collateral security. Call the Nedbank helpline on 0860 116 400 or speak to a Small Business Services representative with any questions or for more information.

HOW TO APPLY

HOW DO YOU APPLY FOR THE STARTUP OFFER

• Talk to our Small Business Services representative in a Nedbank branch
• Call the Nedbank helpline on 0860 116 400 with any questions

At Nedbank, we want you to succeed. That’s why, as part of our commitment to small business, Nedbank is the first bank locally to introduce free transactional banking to small businesses. So call us or visit a Small Business Services representative at a Nedbank branch – and ‘Make Things Happen’.

KEY QUESTIONS AND ANSWERS
Q Can I take out finance of less than R100 000?
A The minimum to qualify for the offer is R100 000

Q Is there a maximum?
A No maximum applies (based on businesses projecting or generating an annual turnover of not more than R5 million)

Q What interest rate will Nedbank charge me on the finance that I take out?
A The interest rate will be highly competitive and based on your credit history and risk profile

Q What happens to the free charges after two years?
A The normal charges associated with cheques, debit orders, cash deposits and internet banking will be negotiated and charged after two years

Q If my business has been in operation between one month and 24 months and I take up this offer, how is the free transactional banking* for 2 years applied? For example, if my business has been in operation for 18 months, does the offer only apply to the next six months of operation or for the next two years from taking up the offer?
A The offer applies for the next two years from when you take up the offer - as long as your business falls within the first 24 of operation when applying

Q If I have an existing business with its accounts at another bank, would Nedbank cover my switching costs (e.g. transfer of a bond and the related registration costs)?
A You would be responsible for paying for switching the finance to Nedbank, but the savings you make in free transactions will more than cover any costs

Q Would Nedbank take care of transferring my debit orders from my existing current account to my Nedbank current account?
A Yes. Nedbank would (click here for more details)

Q How much will I be saving from the free charges?
A It depends on the type of business you have and your transactional behaviour. It will also depend on the volume and value of your banking transactions. You can save between R3000 and R5000 per month if you are a high-volume, high-value transactor. For a business with low banking transactions, an average saving of R500 per month is just as meaningful, especially over one year, as it saves a startup R6000

Q Do existing Nedbank clients qualify?
A Yes, subject to the minimum requirements, namely taking up a minimum startup loan of R100 000