OnDeck has officially launched its new equipment finance loan for small businesses, as it urges brokers to help small businesses gain access to finance.
The fintech lender first began rolling out its chattel mortgage for equipment finance in October last year, however the lender's global CEO Noah Breslow officially launched the product at an event in Sydney on Wednesday evening (17 April).
According to the SME lender, the decision to roll out a new chattel mortgage solution came after identifying that nearly a third of its existing borrowers were using its unsecured loan products to purchase equipment.
Available on 24, 36 and 48-month terms, the risk-based pricing model product (with an annual percentage rate ranging from low to mid-20s) is available for amounts of between $10,000 and $100,000 and can be used for non-primary assets, such as equipment and fit-outs.
The chattel mortgage product does not place any maximum age restrictions against any asset class but takes into consideration both the value of the equipment and its potential to generate revenue for the business.
The top five industries expected to benefit from the product include trucking, medical, manufacturing, technology and construction and heavy equipment.
Cameron Poolman, CEO of OnDeck Australia, said that brokers often speak to OnDeck about the challenges they encounter obtaining traditional finance solutions for non-primary assets.
“These include assets such as catering equipment, gym equipment, racking, IT, and food processing, which mainstream financiers will not finance because of the asset type or its age," he said.
“Currently, to purchase these types of assets, many small business owners must resort to using their valuable working capital or turn to family and friends. Often the purchase simply doesn’t happen and that limits the development or even the ongoing operations of the business."
Earlier this week, the global CEO Noah Breslow encouraged brokers to embrace fintechs and diversify into SME lending.
“I encourage the broking profession to engage with online lenders and diversify their revenue base to include SME lending. By helping SMEs access the finance they need, this would be a win-win for brokers and the small business community,” he said.
Speaking to The Adviser at the AltFi 2019 Australasia Summit 2019 on Monday (15 April), Mr Breslow elaborated that the “win” for SMEs would be access to finance, while the “win” for brokers would be stickier clients and an additional revenue stream.
“Diversification makes a tonne of sense, and we saw that in the US too after the GFC when a lot of mortgage lenders pulled back and brokers had to find other sources of income. What is nice about the commercial sector that we serve is that while a mortgage broker might only write one mortgage to a customer every 10 years, in the SME space a customer might need a loan once a year to buy inventory, for example. So, you can have more frequent transactions with small business customers,” he said.
The Mortgage & Finance Association of Australia (MFAA) has also been focusing on how brokers can support SMEs, recently launching a digital advertising campaign to promote members who provide commercial and equipment/asset finance lending services on LinkedIn.
The ad campaign is designed to target 510,000 SME owners and the finance professionals they consult with to help create awareness of the positive benefits of using a finance broker.
It will promote equipment, commercial and asset finance brokers as having expert knowledge of the SME space and as specialists for finding solutions for complex business loans and will help users connect with MFAA commercial and asset finance broker.
“Finance professionals and SME owners are generally time-poor and will tend to use online information to seek out potential service providers. They are looking for specialised professionals who have the commercial acumen to solve their cashflow and investment problems. This campaign will expose SME decision makers to a deep network of Australia’s industry-leading commercial and asset finance brokers,” said Stephen Hale, the MFAA’s head of marketing and communications.
Meanwhile, George Obeid, the managing director of third party at Judo Capital and president of the MFAA E&CF Forum, added: “The broker market has experienced significant impacts with recent regulatory curbs to residential lending, and this has no doubt presented a unique opportunity for brokers looking to diversify into commercial and equipment finance.
“Early engagement with SME customers and a clear understanding of their business needs is the critical step for brokers looking to build and grow their business in this segment. However, this requires a holistic strategy built around education, training and development and a core understand of the 4Cs of lending (character, capacity, capital and collateral), which in turn will further strengthen the relationship and service to business customers.
The campaign will run until the beginning of June 2019.
[Related: ASBFEO calls on brokers to help SMEs]
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
While the regulations for clawback arrangements have now been set...
The aggregation group has welcomed neobank 86 400 to its lender ...
A marketplace lender has joined AFG’s panel of specialist finan...