SLB launches lifeline for SMMEs and businesses

THABISO NTAOTE

MASERU – Small, Micro and Medium Enterprises (SMMEs) and commercial businesses in Lesotho can now access trade finance following the launch of new trade products by Standard Lesotho Bank on Tuesday this week.

These include Invoice Discounting Finance (IDF), Local Purchase Order (LPO), and Contract Finance (CF). Struggling to obtain financial assistance for many Basotho businesses has been the country’s barrier for years, but now that it will soon be a thing of the past.

Requirements and qualifications needed for these products offer solutions to Basotho businesses as access to finance seems to be at the forefront of Standard Lesotho Bank’s innovative solutions.

The main requirement is proof of trade through a verified purchase order or contract from the customer that the business is serving. The loans are processed within a week of application.

With a joint partnership with IT Company; TP technologies, test driving these innovations, the new products are specifically speaking to Basotho entrepreneurs who are viewed as the economic force of Lesotho’s economy in the increasingly technologically friendly environment. Standard Lesotho Bank says the launch of the Trade Finance is a new portfolio, according to Head of Business and Commercial Banking, Keketso Makara.

Addressing the media, Makara said the products are innovations set up to widen both horizons for small, micro and medium enterprises (SMMEs) and commercial businesses operating in Lesotho.

“This is to ensure that businesses thrive and have adequate liquidity at all times for uninterrupted trade, especially on a short term basis. Businesses, no matter how big or small, need liquidity or capital at all times to realise trade and make profit in the process, so that they are able to grow”, Makara said.

“One of the barriers to economic growth is access to finance, especially for indigenous businesses. I am happy to inform you that with our trade financing products, access to finance to support trade in Lesotho is now a thing of the past”, he added, as the bank boasts the biggest lending book in the country that is in excess of M9.6 billion as at December 2023.

Makara said all businesses play an important role in the economy of Lesotho therefore it is the responsibility of Standard Lesotho Bank to think of new solutions, to ensure a conducive environment in a producer-consumer economy of Lesotho for Basotho to trade.

Asked how these three new products will solve financial needs for businesses, Makara said the bank came up with the best innovative solutions that will revive the economy at large and bring much needed changes to the business landscape of Lesotho.

First, Invoice Discount Finance (IDF) is a form of post-deliver, short-term financing which allows a business to draw money against its sales invoices before the buyer has actually paid. To do this, the business borrows a percentage of the value of its invoice from the bank, effectively using the unpaid sales invoices as collateral for the borrowing used to improve a company’s working capital and cash flow.

Secondly, Local Purchase Order Finance (LPO) is another short term finance option that provides capital to pay suppliers in advance for verified purchase orders. In this case, the bank provides the business with capital to purchase stock using the order that they have got from their customer as collateral so that business can avoid depleting their cash reserves or declining new orders because of cash flow hiccups.

This product allows a business to accept unusually large orders and adjust the loan up or down quickly to meet specified needs without causing cash flow constraints.

Thirdly, Contract Finance (CF) is also a short term finance that provides working capital to enable a business to deliver on a verified contract. Its tenure is limited to the contract period of not more than 24 months as Standard Lesotho Bank will just examine the cash-flows to verify that the contract is viable and that the business will be able to return the loan while keeping the business afloat.

This enables the business to continue to work and finish the project within time, even if they do not have the required liquidity to sustain the business.

TP Technologies’ Marketing manager, Lerato Sekolopata, said they approached Standard Lesotho Bank to finance their orders until their clients were paid in convenient time. Sekolopata said the bank was able to give them more time to return the loan.

“We worked really well with Standard Lesotho Bank until we were able to repay the borrowed money without any complications. This shows we will not struggle to finance our orders in the future because some of the issues Basotho businesses struggle to finance their orders is that offices have to continue to be productive so these product enable the smooth running of other offices”, Sekolopata said, indicating that her company was financed with by close to a million when they approached Standard Lesotho Bank.