OnDeck Australia has said that its “biggest initiative” for 2017 is to have a productive relationship with brokers, which it says are “very important” when it comes to reaching small businesses.
Speaking at the AltFi Australasia Summit in Pyrmont on Monday, OnDeck Australia chief executive Cameron Poolman said: “We understand that 70 to 80 per cent of small businesses will use an intermediary or an adviser to access finance, so what we're wanting to do is to launch our product right, get experience to get the process ironed out.”
The lender launched in Australia in November 2015 and provides unsecured loans to small businesses, ranging from $10,000 to $50,000 for terms between six and 24 months.
OnDeck has said it expects 250 per cent growth this year and, after launching a partnership with brokers a month ago, is looking to further deepen its relationship with the channel.
“It's a really important channel for us,” Mr Poolman said. “A very decent percentage of our originations will work through brokers, so based on that we’ll continue to invest into it, both from a technology and a people perspective.
“We’ll be rolling out a people plan across the country to be working with the brokers, as well as improving functionality and developing our broker platform. So, we've launched our product now, but there will be another launch in a couple of months based on feedback,” he said.
Senior vice president of international Rob Young agreed, adding: “[We’re working on] that combination of tech and service, getting those two things right... we know [brokers] are a very important channel in terms of reaching small businesses.”
Small businesses struggle to access capital
Mr Poolman explained to The SME Adviser that OnDeck chose to break into the Australian market as “an obvious next stage” as the country’s small businesses generally experience difficulty accessing capital.
“When you consider that 80 to 85 per cent of the market here is dominated by the big four banks, small businesses have to either access money through a bank or from family and friends,” he pointed out.
He elaborated that providing unsecured lending is part of the overall solution for small businesses.
“They may want to buy a piece of equipment that they're going to use for a period of 10 years, so it's naturally going to be a secured loan, or a lease, or whatever different credit product they're going to use.
“In addition to that, an unsecured lending product is for a shorter term, so the small business might want it for marketing, purchase of inventory, purchase of equipment… so it's a slightly different need, and the small business is looking at the quantum of their repayments. It's in addition to the other products that brokers are selling,” he explained.
[Related: OnDeck ramps up broker distribution strategy]