Streamline the Process of Closing a Business Deal in Loan Agreements

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business partners has been around since 1991 the company says it signs off on loans of up to a billion Rand a year it was established to assist entrepreneurs with Finance to purchase business equipment but the company has come under Fire over the years for adding a royalty Clause to its loan agreement it has also been taken to court over royalties however the company has worn all these cases it says this Clause is meant to guarantee the company repayment of the loan in an event that the client is unable to make the repayment it is a way of deferring repayments to match the cash flow of the business in some instances we know after doing an assessment of the risk involved in funding the particular transaction that this is the risk and this is the pricing that will match the risk involved in US undertaking or doing this transaction but the cash flows of the business business are not able to afford it today so we can keep the interest rates maybe flat at maybe prime or prime plus one and we say from what we see in the cash flows from year two or year three you'll have made Traction in the market and then there will be a clost that says now a percentage of your sales at that level when your cash flows permit will cover royalty in repaying us for the risk that we've undertaken in supporting you when times or the business was not feasible or able to repay at that particular moment business partners says it understands the frustration that this Clause may cause to its clients however it is necessary for the company to include it in its loan agreements and often times where we have a um a situation where unhappiness escalates is when the business is not meeting whatever targets that it had set for itself and then have to meet what has been contracted to say for the money that we put in this is the return that we require so that could be situations that have led to some unhappiness but the majority of businesses actually are able especially if they're trading at the levels that had been projected at the beginning business rescue practitioners say royalties are there to protect the finum however some businesses question why they would still be liable to pay royalty fees after settling their loans and in an event that the data under go a business rescue process they would still be liable to pay off these royalty fees these royalties will continue but under post commencement Finance whatever royalties were outstanding prior to business rescue is then is an ring Fen anything post will be considered as post commencement finance and must be paid business partners has urge entrepreneurs to seek loans for specific purpose to grow their business the company also encourages business owners to learn and understand the contracts they commit to not Mak sabc news Johannesburg