Small and medium businesses (SMEs) account for 95 percent of all registered businesses and contribute almost 50 percent to the total GDP of sub-Saharan countries.
Access to finance is one of the largest challenges a business owner faces, with almost 40 percent of SMEs in developing countries grappling with access to finance. With traditional lending often cumbersome and not readily available to entrepreneurs, pawnbroking – also known as asset backed loans – can quite simply unlock wealth.
The financial landscape is rife with misconceptions around pawnbroking as one industry that stands out for its persistent portrayal in a negative light.
Charles Meyerowitz, Co-Founder and CEO at Lamna Financial, provides some insights to tackle the myths head-on, providing clarity and understanding about how asset backed loans – truly operates, its benefits, and its indispensable role in the financial ecosystem.
Myth #1: Asset-backed loans are predatory lending
Meyerowitz says that contrary to popular belief, asset-backed loans are not synonymous with predatory lending. Unlike traditional loans, asset-backed loans provide secured loans based on collateral, typically valuable items such as art, watches, vehicles, trucks, and collectibles.
“These loans are regulated by local laws, ensuring fair and transparent transactions that offer individuals in need of short-term cash a viable alternative without risking their credit score or falling into a cycle of debt,” he explains.
Myth #2: asset-backed loans exploit vulnerable individuals
“Asset-backed loans cater to a diverse clientele; at Lamna for example, the majority of our clients are in the upper echelon of South Africa many of which are the driving force behind SME businesses and more often than not need to unlock finance quickly to combat the challenges of financial liquidity,” he says.
He explains that asset-backed loans offer a valuable service by providing immediate liquidity to individuals who may not have access to traditional banking services or credit options. “These clients are sitting with a vast amount of wealth in assets and usually take a loan option for no more than three months to tie them over. Its quicker and simpler than the banks”
He notes that the value of collateral is assessed fairly and transparently, ensuring a mutually beneficial transaction for both parties involved.
Myth #3: Asset-backed loans are a last resort for desperate individuals
“This couldn’t be further from the truth – asset-backed loans are not a last resort but a practical solution for individuals seeking quick cash for various reasons, such as unexpected expenses, temporary financial setbacks, or bridging gaps when financial liquidity is temporarily halted,” Meyerowitz adds. “It provides a discreet and convenient way to access funds without the need for credit checks, lengthy approval processes, or invasive financial inquiries.”
As we all know, Meyerowitz says, cash is what keeps the wheels turning. If you don’t have it at the wrong time, the consequences could be dire – either reputationaly or worse, you could lose your business.
Ultimately, he notes that asset-backed loans are a legitimate financial service that serves a legitimate need in the growing business community in South Africa. “Our average loan size is over three hundred thousand and with over R2-billion advanced to date and a ten-year track record, it doesn’t surprise us that savvy entrepreneurs turn to us for finance solutions.”
The truth about asset-backed loans:
“Asset-backed loans plays a crucial role in the financial ecosystem by providing a safety net for individuals facing financial uncertainty,” he says. “It offers immediate liquidity, flexibility and confidentiality, allowing individuals to address short-term financial needs without compromising their long-term financial health.”
Moreover, Meyerowitz points out that asset-backed loans are not a one-sided transaction but a partnership between the company offering the loan and their clients. “The vast majority of our clients are returning customers sometimes two to three times a year.”
He continues: “We offer a wide range of services beyond asset-backed loans including bridging finance and vehicle finance. For over a decade we have been trusted advisors to over eleven thousand clients who have sought our guidance on financial matters, asset management, and wealth preservation.”
“It’s time to embrace the reality of asset-backed loans and its viable role in the financial ecosystem,” he says. “Asset-backed loans are a legitimate and valuable service that provides immediate financial relief, fosters economic stability, and empowers individuals to navigate financial challenges with confidence and dignity.”
About Lamna Financial
Lamna Asset Loans unlocks wealth through specialised finance. For over a decade Lamna has advanced over R2-billion and assisted over 11,000 businesses and individuals with specialised, bespoke short-term financing solutions.
Based in South Africa with branches nationwide and further afield in London and Botswana, the company is led by co-founder and CEO, Charles Meyerowitz. Lamna is a trusted lending partner, with solutions through three key business divisions: movable asset loans, vehicle finance loans and bridging finance.
For more information visit the website.
