Are All Your Eggs in One Basket?
By Juan-Phillip Gerber, Regional Sales Manager Asset Finance Cape Town
Why should you consider a second-tier funder, such as Merchant West Asset Finance, alongside your primary funding lines with a commercial bank as a strategically sound approach for long-term financial resilience and growth.
Recently I have come across too many companies that have relied solely on a primary commercial bank for their financing needs, this can expose businesses to unnecessary risks, including limitations on credit accessibility during times of market volatility or shifts in bank lending policies. Adding a second-tier funder provides diversification, ensuring you have flexible and reliable financing options to support your evolving needs.
When you put all your eggs in one basket and rely solely on one funder, you are at the mercy of them for your business growth. Is this a position you want to be in or do you like the idea of being flexible and able to make agile decisions in today’s ever evolving and fragile economic climate.
With this said, funders in any shape of form like to start off with a reasonable relationship at first with any new client and scale the level of funding over time. “You also won’t get married straight away without dating for a few months” it’s the same principle for funders.
Don’t be at the mercy of one funder, even if they have been good to you for many years. I have seen too many businesses urgently needing capital to acquire critical assets – whether for a new project, business expansion, or a time-sensitive acquisition opportunity. When the main or sole funding line is at capacity or funding structure pose a hurdle, these businesses risk missing the chance to act swiftly. Additionally, a primary funder often ties up all available security or cessions, which can significantly complicate and delay securing other sources of funding from another provider. This lack of flexibility can result in missed opportunities and the inability to make quick, strategic decisions when they matter most.
Merchant West’s expertise in asset finance complements the broader financial scope of a commercial bank. Leveraging both funding lines ensures you maintain a competitive edge by accessing the right financial tools for the right purposes.
In closing, I believe that having multiple funding lines for your business doesn’t just mitigate risks, you’re empowering your business to seize opportunities, navigate challenges, and secure sustainable growth.
So the question is, how many baskets do you have?
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