Cape Town – A business owner was very confused with his bank’s stance that he can’t do a substitution of debtors on his home loan. A Fin24 expert gives his response.
Fin24 Shawn Stevens said that as an owner of a closed corporation (cc), he recently asked his bank to do a substitution of debtors on his home loan because he got divorced in 2010.
“I have been paying the home loan for the past nine years with no fail. I was told that the application was turned down because I do not have audited financials and that they need these to prove that the bank is not doing wreckless lending according to the Credit Act. As far as I know cc's do not need audited financials.”
Fin24 business development expert Anton Ressel had this advice:
“You are correct that in general a cc does not require audited financial statements, unless it is deemed to be in the public interest, for example, if it has an impact on the general wellbeing of the business community.
This link explains it in detail.
“Clearly, that is not the issue here and in my experience most banks will readily accept signed-off financial statements from an accounting officer as sufficient evidence of financial performance for a cc. I suggest you ask them if this is sufficient. I would be puzzled indeed if they insisted on audited financials. Good luck.”
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