Robert Eiman takes the reins at DBN’s SME Finance
09 October 2020 | Banking
Talking about his mandate, Eiman said his priority will be to sustainably grow the bank’s SME portfolio. He will also manage the skills-based facility for young professionals and artisans which is housed in the SME function, as well as the apex micro-lending facility. The apex micro-lending facility makes capital available for micro-lenders with a beneficial development impact to lend onwards to the public.
Eiman said that the operational emphasis will be to strengthen due diligence on applications. He noted that the recession and the Covid-19 pandemic has shown that it is vital that applicants show the best possible prospects of success. This he added will secure the financial wellbeing of owners, as well as their employees. He also pledged to find ways to speed up application assessments, however he cautioned applicants to ensure that their documentation is complete as incomplete applications would lead to delays.
Asked if there was a recipe for success, Eiman answered that there was no single winning formula for SMEs as each is unique. For this reason, each business must do their own application and not rely on consultants or readymade business plans that do not acknowledge the differences between businesses.
He said there are several characteristics of successful SMEs, the first of which is a rigorous approach to accounting and financial management. SMEs, Eiman explained, are fuelled by accounts and debt obligations. Rigorous financial administration, he said, enables SMEs to meet their obligations and not fall behind in payments. Unpaid bills place financial pressure on SMEs, and this leads to failure.
The second characteristic of success is for owners to budget their salaries, rather than making drawings against the business account. When the owner draws from the business account, she or he is making a withdrawal from a vital reserve against periods of diminished cash flows. That reserve, he said, can also be deployed if the owner has the opportunity to grow or diversify the business.
The third characteristic is partnerships rather than sole proprietorships. He illustrated the value of a partnership with the example of a highly skilled tradesman. The tradesman, Eiman explained, would be excellent at his craft but might not have the necessary business skills or the time to learn them. By partnering with a skilled business administrator, the tradesman could secure the future of his business with strong administration, as well as make more time to use his craft. In this way, partnering not only strengthens the business, but also grows it.
Asked about businesses that experience difficulties, Eiman said the aim of strengthened due diligence is to ensure that businesses financed by DBN have strong prospects of success. However, he acknowledged, the bank will, at its own discretion, do what it can to assist businesses facing challenges. He motivated this with the bank’s approach of securing businesses for the long term, rather than immediately taking possession of collateral.
Two of the remedies at the bank’s disposal are debt restructuring, and mentoring and coaching to build knowledge and capacity.
Robert Eiman was formerly acting head of investments at DBN. His experience in the field of SMEs is augmented by experience as head of SMEs at FNB Namibia. He holds an MBA (Unam) and various certificates from the Institute of Bankers.