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There comes a time in a business or one’s personal affairs when cashflow becomes tight. This is stressful, but normal. The cause is often varied and can be anything from delayed receipts, or the need for immediate liquidity to pursue attractive opportunities. The point is, life is unpredictable, and cashflow is vital.

Whereas traditional lending practise is to score a borrower against his or her risk profile, insist on an appropriate collateral asset and to ensure regular income or turnover, an attractive alternative is to leverage the intrinsic store of value utility in moveable assets, says Lamna Financial co-founder Charles Meyerowitz.

Leveraging the intrinsic store of value is particularly useful in the world of entrepreneurs, where opportunities that arise are often dynamic and may well require quick action. “The Covid-19 pandemic has obviously been a very difficult time for the country, but, as with all black swan events, there have been attractive opportunities for agile entrepreneurs who need to move fast when they present themselves as opposed to going through a time-intensive process,” says Meyerowitz.

Redefining the utility of assets

“Moveable assets, when fully paid off, are seldom thought of as holding inherent cash value. Even if these assets are not new, they can be monetised for short-term funds without being sold. Unlocking the store of value inherent in assets provides an attractive alternative to those businesses or individuals who need fast access to funds without needing to be subjected to the usual extensive paperwork of traditional lenders, and more importantly, without the need to sell the asset,” says Meyerowitz.

Meyerowitz explains that assets can be of use to create what he calls “part liquidity”. This is particularly useful when a client does not need to release the full value of an asset. “Let’s say a client has an asset worth R500,000 but only needs R50,000 now. If she or he were to sell the asset, it would release the full value of the asset even though they just need to use 10% of its value,” says Meyerowitz.

Flexibility of assets

Redefining the utility of assets and leveraging their intrinsic liquidity value is attractive for those in business because of the speed and relative ease with which such a transaction can occur. Lamna, for example, can disburse loans from R10 000 to R10m within the hour.

“We find this to be particularly popular among agile entrepreneurs and is the reason more than 7,500 clients have trusted us as their reliable, trusted funding provider. In fact, most of our customers use the loans for business purposes. The main reasons are that they do not need to submit business proposals or budgets and forecasts, and can enjoy flexible repayment terms,” says Meyerowitz, who adds that traditional lenders also generally do not recognise moveable assets, such as cars, watches or artwork, as collateral.

Besides not needing to sell the asset, Meyerowitz says another reason people choose this avenue to access short-term funds is because there is no risk of the borrower being financially crippled for years if the loan does not work out. There is no recourse towards the borrower beyond the asset. Once the deal is done, the slate is clean, explains Meyerowitz.

The assets that clients generally seek to leverage for funds can vary, but Meyerowitz says the most common are cars and trucks, followed by jewellery, watches and artwork.  There are a broad range of assets that are accepted for these types of transactions that can work for you in a way you probably didn’t know they could.

Due diligence

It is important, says Meyerowitz, that people who choose to unlock the value of their moveable assets for cashflow do their due diligence, and choose to work with reputable and trustworthy lenders.

“There are various ways that an entrepreneur or member of the public can ascertain the trustworthiness of a lender,” says Meyerowitz. “Look for businesses that have been operating for years with a proven track record. These lenders should have the necessary qualifications and they should be registered with professional bodies and the National Credit Regulator.

“Reputable companies would have disbursed a sizeable amount of loans to a large and varied client base – something you can only get with time in the saddle and a proven business model.  A nationwide presence and significant infrastructure should also provide a level of comfort. Due diligence will go a long way in finding transparent, trustworthy lenders,” he says.