The debtor and asset finance lender has soft-launched its first home loan offering and two property-secured products for SMEs via the broker channel.
Non-bank SME lender ScotPac has entered the home loan market for the first time, after launching a new mortgage product for SMEs and two additional property-secured cash-flow products.
ScotPac’s Home Loan for Business Owners enables small and medium-sized business owners to purchase or refinance a home up to $2 million in value. Terms for the mortgage product range from five to 30 years.
It comes with “competitive” risk-based pricing but the lender said borrowers can access “bundled savings” if they use additional ScotPac solutions such as invoice, asset or trade finance.
Businesses must have held an Australian Business Number (ABN) for at least 12 months to qualify for the mortgage, which can be used for purchase or refinancing.
ScotPac chief executive Jon Sutton commented: “Our new home loan for business owners will assist the hundreds of thousands of self-employed entrepreneurs who struggle to get home loans from traditional finance sources.
“The business owner then has the option, as their business evolves, to use their residential security for their future business lending with ScotPac, to quickly fuel business growth.”
As well as the home loan, ScotPac has also released a new property-secured Business Loan allowing an SME owner to unlock equity in their property to fuel business growth, or to refinance from other business loans.
Similarly, its property-secured Business Cash on Call line of credit aims to provide working capital solutions to SMEs that may need to “smooth out cashflow and cover unplanned investments and expenses”. The non-bank said this product was “designed to compete with the more traditional bank overdraft” by giving the SME client the ability to draw funds if and when the business needs it (and only paying for what is used).
“This allows a business to manage day-to-day expenses to improve their cashflow and to quickly access funds to manage extra expenses as they occur,” Mr Sutton commented.
Both the business loan and the line of credit come with terms of between one and 30 years, and offer either principal and interest or interest-only repayments up to five years. The business loan also comes with options to redraw or make extra payments.
All three products provide access to $20,000 to $2 million per property, or up to $4 million for multiple properties.
They are initially only available through the broker channel, however ScotPac said it has plans to expand into the direct channel next year.
“Brokers and their clients will appreciate all three new solutions have fast set up, no-fuss paperwork and conditional approval in as little as 48 hours, plus access to a dedicated relationship manager who can help with funding solutions as a business evolves,” Mr Sutton said.
He added that as well as providing more options for SMEs, it also helps offer brokers more diversification options. ScotPac has outlined that while it is already working with a pool of brokers on these products (with its first loans already have been written), it is also accepting accreditation applications from commercial and residential brokers wishing to offer these three new products to SME clients.
‘A yawning gap of underserved SMEs’
Speaking of the new property-secured product line, ScotPac CEO Mr Sutton said it had launched the products after broker and client feedback had suggested that there was a “yawning gap of underserved SMEs that actually want to use their home as as part of collateral to expand their businesses”.
He pointed to ScotPac research that found that business owners face challenges when securing a home loan or qualifying for bank funding for their business.
“In Australia alone there are 350,000 self-employed business owners who face challenges securing a loan to buy or refinance residential property,” Mr Sutton said.
As such, he stated that many small-business owners “cross pollinate between their personal and their business life” to access finance, but that ScotPac would be able to help SMEs access both mortgage and business loan products in one place.
According to ScotPac, it marks the first time an “Australian non-bank SME specialist lender has made the move into offering home loans” (rather than starting with mortgages and diversifying into other SME loan products) and opens it up to a greater pool of business owners seeking finance.
It follows on from the business lender’s recent launch of its SME Bounce Back Fund, which enables businesses to access up to $1 million capital for a minimum term of 12 months, with the first three months interest-free.
[Related: ScotPac launches $100m SME fund]
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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