Paragon sees rising demand for loans from wealthy clients
FINANCIAL services company Paragon Lending Solutions, a local nonbank lender, said on Wednesday it was experiencing a surge in demand for short-term loans from wealthy consumers, who were avoiding the big banks where lending criteria was being tightened.
South Africa’s larger banks have started rethinking lending criteria for unsecured lending in response to government concern about high levels of household debt.
The current ratio of household debt to disposable income is almost 77% and is expected to rise as more credit-active consumers struggle to repay their loans.
Paragon CEO Gary Palmer said he expected the demand for loans from nonbank lenders from wealthy individuals to continue in 2013.
Paragon provides short-term, asset-backed funding secured by commercial, industrial or residential property.
"High net worth individuals and investor companies are increasingly finding it difficult to obtain finance quick enough from the commercial banks due to the their slower turnarounds and restrictions on unsecured lending," Mr Palmer said.
"At times, commercial consumers need a quick short-term finance injection, but the amount of paperwork and transactional requirements it takes the bank to structure the finance for asset-backed lending often takes too long.
"The banks’ processing times can currently take anything from two to three months, and their turnaround times are increasing due to new Basel requirements."
More in this section
- Guptagate report shows manipulation, collusion and illegal blue lights
- SABC presenter Mbuli hailed as patriot and ‘zealous newshound’
- Karabus lawyer says South African nurse behind bars in UAE
- Eskom was ‘on the brink of a power shutdown’
- Iran ‘behind US cyber blitz’
- THICK END OF THE WEDGE: We can already write the NDP off