Business plans in bank decision-making when financing new ventures in South Africa

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Authors

Pretorius, Marius
Shaw, Gordon

Journal Title

Journal ISSN

Volume Title

Publisher

Juta

Abstract

This article focuses on the position that South African commercial banks adopt when evaluating an application for finance of new business ventures. The role and importance of the business plan in the decision-making process is highlighted and investigated. This article begins to qualitatively describe the decision-making processes, criteria and processes instituted by the four major South African commercial banks that between them serve 96 per cent of the banking services for small business. It then questions the barriers placed on applicants applying for finance and recommends how these barriers can be removed. The article concludes that banks finance business ventures with poor potential for success if the applicant is creditworthy or has the necessary security rather than assist applicants with good plans and ventures with potential, but lacking sufficient security.

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Keywords

South African commercial banks, Business ventures, Business plan, Small business banking services, Financing

Sustainable Development Goals

Citation

Pretorius, M & Shaw, G 2004, 'Business plans in bank decision-making when financing new ventures in South Africa', South African Journal of Economic and Management Sciences, vol. 7, no. 2, pp. 221-241. [http://www.journals.co.za/ej/ejour_ecoman.html]