ABSA Business Loans Review 2024

Absa offers business loans starting from R25,000.00 with a repayment term of up to 10 years. Loan account holders are required […]

Absa personal loan

Absa offers business loans starting from R25,000.00 with a repayment term of up to 10 years. Loan account holders are required to pay 1/40th of the loan amount monthly. 

Absa Group Limited provides ABSA business loans and the bank  is one of Africa’s largest diversified financial services groups, with a presence in 12 African countries.

ABSA business loans provide asset loans, working capital, and business expansion finance to South African businesses, both for new and established small, medium, and micro-enterprises (SMEs).

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 options for 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 risk recognition and mitigation, pricing, and financial covenants.

Business term loans are ideal for financing developmental projects, business expansion, or business purchases like management buyouts.

Funds can be withdrawn anytime you need them after the facility has been advanced.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 and 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:

  • The Flexi reserve facility keeps additional funds which can be accessed at any time.
  • Inter-account transfers of available funds from the flexi reserve facility
  • Repayment frequencies are monthly, bi-monthly, quarterly, half-yearly, and yearly.
  • Auto-capitalisation to reduce outstanding capital to benefit from the interest burden

Businesses use debit orders to pay their instalments

Requirements for Absa 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

The ABSA business overdraft is another option within the ABSA business loans. It is an ideal way of borrowing funds to improve your business’s working capital and cash flow.

Business Overdraft Loan

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 the 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 Absa 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

Business Credit Cards

ABSA business loans have an option for you 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 at any point-of-sale payment terminal. This provides you with convenience and control over your funds.
  • Mostly, these Visa cards are for medium-to-large corporate enterprises and organizations.
  • Companies issue these cards to their employees and the departments that handle more business transactions, in order to avoid cash advances.
  • The spending limits, cash withdrawals, and controls of each card are set prior to issuing it to users.

Business cards

  • 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; one is 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 account balances to the main account for payments.
  • To settle account balances, you can use a 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 MasterCard.

Business revolve credit card

  • There are zero fees charged when you swipe your card on any point-of-sale machine worldwide, or on online transactions.
  • You pay 3% of the outstanding balance monthly.
  • The card comes with a revolving credit facility
  • Visa cardholders receive a 15% discount on lounge access charges at Bidvest Premier Lounges.
  • There is a charge of R34 monthly service.

Advantages of Absa Business Loans

  • There are different types of loans to choose from. 
  • Monthly fees are competitive. 
  • Loans are customisable based on affordability. 
  • Companies with a good credit score get low interest rates. 
  • Businesses have an option to skip payments. 

Disadvantages of Absa Business Loans

  • Startups can find it hard getting some of the Absa loans. 
  • Low credit score results in high interest rates. 

Conclusion

With so many options, obtaining one of the ABSA Business Loans should not be difficult. Choose and pursue the option that best meets your company’s needs. Accounts can be opened online at the Absa website or in person at the nearest Absa branch.

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