NOMPU SIZIBA: SME lender Sasfin has secured close to R1 billion from the Dutch Entrepreneurial Development Bank to aid in providing loans to women, youth, and Covid-19 impacted businesses. The funding comes in two pouches. One is a R390 million funding align, while R600 million is a portfolio guarantee facility called Naseera. The package not only includes funding, but technical assistance too.
Well, to tell us more about this resource and how it’s going to be used impactfully, I’m joined on the line by Michael Sassoon. He’s the CEO of Sasfin. Thank you so much, Michael, for joining us. Now, this Naseera guarantee facility is backed by EU funding. What are the goals of this funding and parameters? And is it something that you as Sasfin applied for?
MICHAEL SASSOON: Hi Nompu, thanks for having me on your show. We are very passionate about entrepreneurs and entrepreneurship in South Africa. We’ve been funding entrepreneurs for many years. So we did engage with the FMO, who’ve been a partner of ours for many years. They’ve provided us funding over the years.
Really, the thinking is how do we bring under-served entrepreneurs into the more formal economy? How do we enable these entrepreneurs, who are critical to the growth of our economy, to access funding where they ordinarily might be perceived as higher risk by the banking sector, by lenders. The FMO, together with the EU, understand this risk and they are rolling out in different parts of the world into emerging markets to enable banks such as ours to work with entrepreneurs, to help them kind of grow their businesses through the provision of finance and other support.
NOMPU SIZIBA: In terms of the people that you’re going to be assisting, under-served communities, do you already have businesses in mind that have perhaps already approached you, or are you going to be reaching out to people, as you are now I guess, to say, look, we have this facility and we want to help under-served communities, Covid-hit businesses, and so forth.
MICHAEL SASSOON: For the last few years we’ve been evolving our …… business banking platform Beyond, which really has been targeted at call it under-served entrepreneurs, where we integrate banking and accounting, payroll and investing, and now we integrate foreign exchange, and have offered credits into this space over the last few years. That’s over and above the normal credits that we’ve been providing over many years to more established entrepreneurial businesses. And this was therefore a natural evolution. Many of those small businesses have been looking for a banking partner which can help them administrate their business, network and grow their business through the provision of these different services. It’s now a natural evolution for them. So I think that we do have many of those clients on our banking platform as it is. But we do see it as an opportunity to engage with new entrepreneurs, younger entrepreneurs, businesses which are looking for funding and the partner is willing to apply different …… , which is quite important, accessing this market in helping them obtain this funding.
NOMPU SIZIBA: So when it comes to the terms of lending this money, what will those be – particularly in those instances where traditional collateral may not be there? And will it be a sort of bespoke service in terms of the amount loaned and the length of the finance deal?
MICHAEL SASSOON: We can use it for different types of lending products that can be used to support working capital, finance, as well as turning debt in the form of, say, asset finance. And we are working with the FMO and some consultants around the credit model and the credit crunches for work in this segment of the economy. We understand that traditional credit criteria might crowd out this section of the economy. But there are good-quality entrepreneurs with good potential who are able to take a little bit more risk, which the guarantee allows, and supply the ….. . We can help them grow, but we understand that it’s going to require a different approach. And then we are investing in quite a bit of technology, together with the FMO. They support Sasfin in this regard to adopt these new credit methods.
NOMPU SIZIBA: Michael, what boxes do people need to tick in order to get your hearing and perhaps finance and even technical assistance?
MICHAEL SASSOON: We are looking for established businesses. When I say “established” they can’t be brand new ideas. We wouldn’t lend to an idea. These are businesses that have be going for one or two years, who have demonstrated that they are able to win clients, that they are able to generate cashflows, and they now need some funding to get to the next level.
But, as I say, we …… facilities available and we have already taken on some clients who do fit into this profile. We’ll only really be able to take it …… en masse into the segment of the economy once we’ve established the specific …… coming months.
NOMPU SIZIBA: Well, we’ll leave it there. Thank you so much, Michael, for your time and all the very best with it. And maybe we’ll communicate again as to where people can go once you’ve worked out a framework for it. Thank you so much. That was Michael Sassoon, the CEO at Sasfin.