How Small Business Lenders are Changing the Financing Landscape for Au Businesses

In the years gone by, traditional financial institutions such as banks were the sole custodians of business financing solutions in Australia. If you are a small business owner in need of startup/working/expansion capital, the bank is your best bet and God help you if the loan officer doesn’t like your application (or your face).  In the recent past, the monopoly of traditional financial institutions is being broken in the lending arena as many small business lenders now provide competitive loan offers to small businesses. This piece looks at three reasons small business lenders are changing the face of small business in Australia.

Small business lenders are shoring up credit deficit

The demand for small business lending in Australia shows that Australian small businesses need to borrow about $150B per year. However, the available lending facility in the market is about $77B. When the demand of a product is more than the supply, the competition to buy that product often becomes harder.  Hence, the loan applications from many small businesses often rejected because there’s not enough money to go round.

Now, some fintech firm such as Amazon’s Amazon Lending have started showing interest in the Australian small business loan market. Square has also launched its payment solution in the Australian market and it’s only a matter of time before Square Capital is available to small businesses. PayPal’s working capital service is also well-known among Australian small businesses and the firm has originated more than $100M in loans.

Small lenders are pioneering innovations

The fact that the demand for small business financing currently outstrips the supply is putting Australian small businesses at a disadvantage because they have to jump through many hoops in the bureaucratic loan process. However, guides on show that small business loan lenders are making the loan process simpler for business owners who are tired of jumping through all the hoops of Australian banks.

To start with, many of these small lenders use artificial intelligence and computer algorithms to provide you with an eligibility test that could give you results in under 60 seconds. Hence, it takes less than a minute of work to know if you are eligible for a loan – a sharp contrast to the tons of paperwork you’ll be required to provide at the bank.  The nimble nature of small business lenders also ensure that you don’t have to go through a long agonizing wait before you get money. Once your loan is approved, you can expect to see the money in your bank within 24 hours.

Small lenders are serving ‘unserved’ and underserved businesses

Interestingly, arrival of nimbler small business lenders in the financing market for Australian businesses is meeting an important market need. Many Australian small businesses are locked out of the traditional loan marketplace because of many constraints. Some business might not be eligible for a bank loan because they are too young, need too little (or too much) money, or have less than excellent credit. Small business lenders have different loan packages designed for different financial situations to improve odds that your small business will be eligible for the financing when necessary.

Many Australian small business lenders offer business funding of as low as $5000 and as high as $400,000. Many of these small business lenders have a strong online presence for you to start and complete an application process without setting foot in a brick and mortal location. The best part is that some small business lenders offer unsecured business loans to meet the funding needs of businesses that might be able to put up collateral.

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