Abstract
The purpose of this study was to evaluate the commercial banks’ lending model for small businesses in South Africa. The multiple case study design and purposive sampling were used to select six small businesses from a bank’s database for the study. The qualitative data was categorised and analysed thematically. It was found that the lending criteria are based on the bank and client’s long-term relationship, client’s background, character, collateral, capital, capacity and affordability, that the lending model is helping to grow small businesses in the country. The commercial banks’ lending policy should allow flexibility, among others, in terms of the minimum deposits and interest rates charged.
Highlights
The purpose of this study was to evaluate the commercial banks’ lending model for small businesses in South Africa
The SA commercial banks index (2013) reveals that the number of employees in the small businesses sector has risen by 6% year on year
Small businesses are faced with many challenges such as legislation, finance assistance and training, which lead to limited exposure and ability to expand their businesses (Financial Mail 2013)
Summary
The purpose of this study was to evaluate the commercial banks’ lending model for small businesses in South Africa. Three small businesses had their assets finance applications approved and three had theirs declined by the commercial bank.
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