Banjo set to offer ‘frictionless’ SME loans of up to $1 million
Banjo Loans, an online SME lender, has announced that it has secured an initial $100 million debt funding facility from a major Australian financial institution to help it expand its reach into the larger, more advanced SME sector.
This debt funding means Banjo is now able to leverage its growth and offer the SME market unsecured loans of between $20K and $1 million, via securitised warehouse.
Banjo CEO Guy Callaghan says, “With RBA data showing 95% of all SME loans are secured, and half of all small business loans are secured by residential property, this funding will allow us to push further into a sector where we know there’s currently an over-demand and under-supply of higher unsecured loans.”
“We were previously filling a gap in the market, now we can competitively grow it. This will only continue as we grow our product offering.”
Having secured the initial $100 million debt funding facility from a major financial institution, Banjo is also working with Aura Funds Management as the mezzanine funder.
The lack of larger unsecured loans in the Australian market is echoed by a recent Productivity Commission Report which states ‘’While the SME market is well covered by various lenders and products, there appears to be a gap for unsecured finance between $250,000 and $5 million, with few lenders willing to offer these loans.”
According to Guy Callaghan, alternative lenders like Banjo respond to SME and market demands more proactively than the larger incumbents.
“The listed banks have predominantly focused their attention on the retail and larger corporate markets. Often, SMEs fall between the gaps as banks try to address the growing demands in the retail market and satisfy the larger corporate customers. As a result, challenger brands like ours are growing as alternative finance and banking solutions to meet demand,” he says.
“The large banks’ risk metrics generally don’t allow them to lend unsecured but rather need to secure against property. And culturally in Australia we’re very property-focused.”
“Many of our SME clients report that applying for a loan to one of the large Financial Institutions is an exercise in frustration. Approval times can stretch out to months,” says Callaghan
“Additionally, SMEs are constantly under pressure servicing excessive debt levels and diversifying their funding base/finding new sources of funding.” See Banjo Research.
Brett Craig, Director of Aura Funds Management said, “We are happy to transition our exposure in Banjo into the warehouse and expand our investment. Banjo’s risk management has been strong since we started funding them, and we are of the view that the business is well positioned to grow significantly in the near term.”
The fintech business lender has been one of few in the market to provide larger unsecured loans to bigger, more advanced SMEs via a fast, user-friendly digital process supported by a highly experienced customer service team. With a core understanding of the SME value chains across sectors Banjo is able to respond to SME and market demands more proactively than the larger incumbents. Banjo’s self-built platform means client loans are reviewed within hours and once approved can be funded within 24-48 hours.
Having held steady through the pandemic, Banjo is now experiencing strong growth and is planning on launching a commercial asset finance solution.
