Banks will not finance innovative technology until it has been successful in the industry for at least a year, says Sizwe Tati, managing executive of Absa Small Business.
"Banks believe in history, and entrepreneurs believe in the future," he says.
Speaking at ITWeb's Oracle SME Forum this week, Tati said banks require small businesses to provide a track record for new technology. He added that countries like China and Japan have financed unproven technology in the past, which poses a large risk to financial institutions.
Tati noted that another reason banks avoid financing innovation is that most people are brand-loyal. He said small businesses must put the proper marketing, growth and sales strategies in place to overcome this.
The challenge, he commented, is bridging the interests of the banks and the entrepreneurs. Redefining the solutions that businesses use can change the market and has done so in the past.
While these challenges exist, Tati noted it is essential to nurture small business, because what may be small now could be the enterprise of the future. "Focusing on SMEs is an economic reality, as it grows future markets."
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