Rate-decreasing loan launched for SMEs

The “Australian first business funding product”, available through the broker channel, offers SMEs loans of between $200,000 and $500,000, with interest rates ranging from 14-20 per cent (annual percentage rate).

The product also has an extended loan term of up to four years (for more established businesses), following client demand for a longer-term loan.

Lumi Lux provides SME borrowers with 25-bp discounts on their rate every six months (on the anniversary of the disbursement date) to a maximum of 2 per cent APR.

For example, a loan with a starting interest rate of 14 per cent will decrease to 13.75 per cent six months after the settlement date and to 13.50 per cent at 12 months. 

The non-bank lender said that it hoped the new product would provide businesses with more certainty at a time when interest rates are expected to increase.

Officially launching the product on Thursday evening (16 June), Lumi chief executive Yanir Yakutiel said that he believed Lumi Lux “opens a new chapter in business lending”.

He said that while most lenders kept borrowers at the same rate, regardless of behaviour or loyalty, the new product “liberated borrowers from loyalty tax”. 

Mr Yakutiel continued: “In a rising interest environment, we wanted to develop a product that is countercyclical and actually decreases [their] rate over the term of the loan...

“It is the only business loan in Australia that dynamically rewards customers for good repayment histories over the term of the loan.

“Lumi Lux was designed for more established customers who want to take their businesses to the next level…

“By using Lumi Lux, our customers can fund the growth of their businesses at decreasing rates.”

John Clifford, Lumi’s head of third party, said that the new product would give brokers a new way to assist their clients. 

He said: “Since there’s nothing like the Lumi Lux business loan on the market, finance brokers will have a unique product to offer clients looking for larger loans with longer terms and unique features. 

“The decreasing interest will also give business owners the confidence to access finance at a time when interest rates are expected to increase. We have many customers who have adapted and grown stronger through the COVID era. They’re looking for business funding that has adapted and innovated as they have.”

[Related: SME lender offers 4-week repayment holiday interest-free]