We have a chain of 38 furniture stores that need to finance the production of furniture for clients who do not have the cash flow to pay them immediately. We are aiming to create a creditors book and manage the credit sales for them in a separate business model.
Our target is to lay out R 100k per branch times 38 branches at the end of Feb 2012.
The national credit regulator in South Africa allows any registered financial provider to charge a fee for financing a product or service. The normal rate is as follows:
Initiation Fee: 10 % of the value/loan
Service Fee: R 50.00 plus vat (14%) per month
Credit Insurance: +- 1% per month on value/loan
Interest: 5 % per month on value/loan
Total Cost of Credit: 40- 60% per year
Return on Investment: 12% + per year
This concept is tried and tested by various competitors and is working excellent if the funds and credit scoring are correctly done. We have both systems in place to control this function. We have signed an exclusive deal with them to manage the creditors book.
We need silent and active shareholders depending on their time restraints.
Credit is always available to competitors and the aim is to have the fastest and best service. We opened a 10 seater call center to manage the clients and the branches.
We are still in the search for more investors. We have received already R 1 m to start the project, we spent R 500k for offices, computers, furniture and programs and now we need more seed capital for clients to start end of Feb 2012.