Millions of South Africans are over-indebted, and even with the recent surprise cut to the repo rate, both businesses and individuals face a harsh interest rate environment.

More than ever, it’s important to assess the type of debt you take on, considering the risk it could pose to your personal finances.

Charles Meyerowitz, co-founder and CEO of lamna, argues that in this context, it’s vital for South Africans to consider alternative funding sources that don’t require personal sureties.

He says, “Traditional lenders usually require that you sign sureties and therefore put yourself at risk when taking on debt.”

Three publications have recently featured Meyerowitz’s insights:

• SAFranchise Warehouse, in the article South Africans urged to mitigate personal risk ahead of repo rate announcements
• RISKAFRICA Magazine, in the article Asset-backed funding
• The New Age newspaper (online and off), in the article Debt breaks marriages.

Why short-term, asset-based loans mitigate personal risk

According to Meyerowitz, alternate avenues for generating cash flow, such as asset-backed lending, allow professionals to “not only mitigate personal risk by avoiding excessive long term debt, but also enjoy immediate liquidity.”

In the case of an asset-based loan like those that lamna offers, business property or a personally owned asset – such as a paid-up vehicle, a luxury watch or some other item of value – serves as collateral for a loan.

Because the asset secures the loan, there’s no requirement for any other form of personal surety.

A client who defaults on an asset-based loan risks losing the asset that was accepted as security, which may be resold to recoup losses. However, there’s no risk to other personal assets.

This means that you can take an asset-based loan without putting your or your family’s home and personal possessions at risk.

For more information about using an asset to secure a short-term loan, contact us on 086 111 2866 or simply complete and submit our online application form.