Non-bank lender Lumi has announced that it has doubled its loan limits and increased its loan terms by six months to offer brokers and their small-business customers more business finance options.
Fintech lender Lumi has announced that it has doubled its loan limit from $100,000 to $200,000 and increased the maximum loan term from 12 months to 18 months.
The lender will now offer unsecured loans of up to $100,000 and asset-backed loans of up to $200,000 in a bid to offer a more “convenient and flexible option” for small businesses to pay off their loan.
However, it has said that it will be “selective” on the loans that can be extended out to 18 months rather than offering it to all clients.
“We aren’t allowing 18 months on all of our loans, but we’re definitely seeing that it is very beneficial for customers and it allows them to retain a lot of difference between what would be a 12-month repayment and an 18-month repayment and invest that in the business and have additional growth in their businesses, which is really the outcome we are desiring,” Lumi founder and CEO Yanir Yakutiel told The Adviser.
According to the SME lender, the move to increase its terms and limits came off the back of demand from the direct and broker channels.
Mr Yakutiel commented: “Small businesses find it extremely difficult to obtain the funding they need to grow. There are over 2.2 million small businesses in Australia, and with the sector accounting for half of our workforce, there’s a clear opportunity for alternative lenders to better serve small businesses, because when they thrive, the economy does, too.
“At Lumi, we’re constantly listening to our customers and broker partners to understand how we can introduce more options to better suit their needs. We’re here to revolutionise the user experience in financial services through our dedication to transparency and customer support."
Mr Yakutiel told The Adviser that the larger loan limits will be offered to qualifying customers that can offer a security such as plant and equipment or property.
“We will try and look at an asset because it is quite a large exposure, so we are looking at asset-backing from the borrower. Typically, the security can be plant and equipment, property, whatever the case may be.
“The benefit for the borrower is that the cost of funding is substantially lower, so it is a much more efficient way for them to fund their business,” he said.
The CEO added that the lender was increasingly seeing demand for larger loan limits as “the businesses that are on the larger end of the spectrum that need $100,000 plus were historically bank or bankable customers and now brokers are telling us that they are starting to see that the banks are retreating from small-business lending in general, even on the margins where they used to lend, and that they are not lending any longer. Or, even if they are lending, it is quite cumbersome.
“So, brokers are transferring a lot of that demand from banks to alternative lenders. At Lumi, we made a commercial decision that we want to be a beneficiary of that and help our brokers support their customers.”
Lumi said it was able to increase its loan offering following its second funding round, where it secured $8 million.
[Related: SME lender eyes growth after raising $8m]
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.
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