The Load Process

The company is able to complete the entire process in 10 days from the date all the information is furnished by the applicant.

Credit Assessment & Loan Approval Process

Initial telephonic screening: [open]
The first telephonic interview is used to determine whether the company would be able to assist the customer with funding. Should it be established that the customer can potentially be assisted, an “application pack” is sent via either email or fax. Sometimes hard copies are provided to customers. The application pack comprises easy to complete forms such as: an application form, board resolution to borrow, assets and liabilities form, etc. Royal Fields Finance distinguishes itself in this area by working with prospective clients in compiling the information. For example, where an applicant is not in possession of audited annual financial statement or management accounts, bank statements are relied upon to assess the applicant’s financial position. The company also assist applicants in compiling financial projections, where necessary.
Boardroom due diligence: [open]
Once an applicant has collated all the required information, an appointment is made for the face-to-face interview. The interview is basically premised on the company’s comprehensive due diligence checklist. Sometimes the face-to-face interview is also used to assist clients complete the required information.The major importance of the first interview is to assess the applicant’s ability to generate cash flow and repay the loan, the owner’s entrepreneurial flair, management style, project management skills, professional and ethical conduct, credibility, commitment, etc.
Credit Assessment: [open]
Once all the information is collated the credit application is assessed according to the 5 Cs of credit assessment, i.e. Character, Capacity, Capital, Collateral and Conditions.

Character focuses essentially on a borrower’s track record in paying his loans. In this regard, Royal Fields Finance utilises two credit bureaus to perform credit vetting on applicants. Unlike other financiers, the presence of an adverse credit record does not automatically disqualify an applicant. The company looks into both the severity of the adverse record and the reasons underlying same.

Capacity relates to the business’ ability to generate cash flow and repay the loan. The investigation involves both quantitative and qualitative aspects of the business. Quantitative aspects relate more to the business’ financial performance. Essentially, the products or services supplied must be priced to cover cost of sales, operational expenses, tax and profit. Experience shows that a number of entrepreneurs under-price their services or goods in order to undercut competition. This explains in part why some SMEs are unable to access funding even where they are backed by government contracts.Royal Fields Finance distinguishes itself in this regard by focusing mainly on cash available to service the debt (Debt service cover ratio). This is based on the founders’ belief that given the age of SME businesses, it is near impossible for them to meet all the traditional financial ratios considered by traditional financial institutions.Qualitative factors considered include enquiry into the management’s technical expertise and experience, existence of market for the goods or services, competition and market conditions. Existence of a captive market, contract or uptake agreement for goods or services greatly enhances access to finance.

Capital and collateral aspects of credit assessment have probably been the most difficult to pass for SMEs. Traditional funding institutions like to see business owner risk capital of between 10 – 40% and some form of collateral prior to extending credit. In the South Africa’s historical context, this undermines efforts by black owned SMEs to access funding. As a consequence, Royal Fields Finance looks at each application and structures these requirements accordingly. In most instances, Royal Fields Finance extends 100% funding to SMEs and price the funding accordingly.Royal Fields Finance also differs from many financiers in a sense that credit-scoring models are not used to assess applications. Royal Fields Finance relies on credit staff and the Credit Committee to adjudicate requests for funding. The approach allows for an in-depth consideration as well as a forward-looking approach to funding requests. Whilst Royal Fields Finance is a profit driven organisation, the company 100% buys into the developmental imperatives associated with extending credit to SMEs, which are globally recognised.

Compilation of credit reports: [open]
Once all the information has been assessed, a credit report is compiled for consideration by the Credit Committee.
Credit Committee: [open]
The Credit Committee sits every Friday and considers and approves applications.
Due Diligence: [open]
An onsite due diligence is conducted to assess the project to be funded.
Terms and Conditions: [open]
The company utilises five legal agreements to conclude loans: Loan Agreement; Cession Agreement; Collection Account Agreement, Pledge of Shares and Suretyship. A pre-quotation agreement is also issued in line with the NCA prescripts.

The company is able to complete the entire process in 10 days from the date all the information is furnished by the applicants.