Posted on January 12, 2021 by Staff Writer
ABSA business loans offer South African businesses with startup and existing small, medium and micro enterprises (SMEs) asset loans, working capital and business expansion finance.
Depending on your business needs and its performance, you can get any business loan amount starting from R25 000 or other borrowing options provided by ABSA.
General Qualifying criteria
- Businesses with an active ABSA Business Account in good standing
- Personal suretyship of the principal(s)
- Good credit history/ additional credit criteria
ABSA has quite a number of business loan packages, therefore in this article, we list and review each product, rather than generalizing our review.
There are 4 ABSA business loans options you can access from ABSA:
- The Business Term Loan
- Business Overdraft
- The Business Revolving Loan
- Business Credit Cards
ABSA Business Term Loan
With the ABSA business term loan, you are able to structure repayment terms of your loan to meet your budget.
There are two option of repayment structure, which are;
- The skip payment option and
- The balloon payment on the last instalment.
While negotiating the loan, you have to include a number of elements like the risk recognition and mitigation, pricing and financial covenants.
Business term loans are ideal for financing developmental projects, business expansion or business purchases like management buyout.
Funds can be withdrawn anytime you need them after the facility has been advanced. You don’t have to ask for a new loan or sign a new contract because this saves you time, money. You will not have to do any paperwork.
The loan repayment period may go up to 10 years, with several repayment options to consider:
- Flexi reserve facility that keeps additional funds which can be accessed any time
- Inter-account transfers of available funds from flexi reserve facility
- Repayment frequencies are monthly, bi-monthly, quarterly, half-yearly and yearly
- Auto-capitalisation to reduce outstanding capital to benefit from interest burden
Businesses use debit orders to pay their instalments
Requirements for business term loan
- Financial statements, to determine the affordability
- Openness to credit assessment, to check the scoring
- Personal suretyship of the shareholders, directors or members
- Additional security against the facility is a requirement at times
Business over draft review
The ABSA business overdraft is another option in the ABSA business loans. It is an ideal way of borrowing funds to improve your business working capital and its cash flow.
Interest is negotiable and can only be charged on funds you have already used and not on the overdraft limit.
The interest payable is calculated on daily balances of the overdraft using the agreed interest rate.
Your business is granted the overdraft for an agreed fixed period of time. With no need to commit any collateral security.
The set overdraft limit agreed on is reviewed yearly. However, you can still review it as and when business is in need.
Requirements to get the business overdraft
- Personal suretyship of the principal
- You should be a holder of an active ABSA business current account
Business Revolving Loan
In ABSA business loans a revolving loan is the bank’s lending of funds, of a certain amount agreed on.
You then pay back the loan with an intention to borrow again.
This allows you to borrow as many times over the term of the agreement, according to the terms reached with ABSA.
The revolving loan is convenient for short to medium-term borrowing. It allows you to borrow any amount from a minimum of R25 000, there is no set limit on how much you can borrow.
There is no maximum limit to the amount you can access, however it is your business performance and size that set the limit.
Requirements of the Business Revolving Loan
Personal suretyship of the principal
ABSA business credit cards reviews
ABSA business loans have an option to take up business credit cards for your operations. This is ideal when you need funds to manage your day to day business expenses.
There are 3 business cards to go for:
- Corporate and Purchasing Cards
- Business Cards
- Business Revolve Credit Cards
Corporate and Purchasing Cards
- The visa corporate and purchase cards are accepted worldwide in any point-of-sale payments, this provides you with convenience and control over your funds.
- Mostly, these visa cards are for medium to large corporate enterprises and organisations.
- Companies issue these cards to their employees and the departments which make more business transactions, in order to avoid cash advances.
- The spending limits, cash withdrawals and controls of each card are set prior to issue it to users.
- Just like most credit cards; the ABSA business card gives you 55 days interest-free on all point of sale purchases.
- They have 2 accounts; the main account and the other is a user account for the cardholders. Meaning you receive two statements, one for the main account and the individual user account.
- The bank forwards the individual user accounts balances to the main account for payments.
- To settle account balances, you can use the debit order or EFT as a payment method.
- You can swipe the Business Card anywhere in the world, in all the places that accept Visa and MasterCards.
Business revolve credit card
- There are zero fees charged when you swipe your card on any point-of-sale machine worldwide, or online transactions
- You pay 3% of the outstanding balance monthly.
- The card comes with the revolving credit facility
- Visa cardholders receive a 15% discount off of lounge access charges at Bidvest Premier Lounges
- There is a charge of R34 monthly service fee
With so many options, getting one of the ABSA Business Loans shouldn’t be much of a big problem. Choose the option that suits your business needs and pursue it.