A three-month-old fintech has announced raising $31.5 million as it looks to serve a market that has long struggled to access finance.
New non-bank lender Lumi has raised $31.5 million, $25 million of which is a debt facility provided by Israeli specialist credit fund Arbel Fund, with the remaining $6.5 million in equity capital provided by the Josh Liberman Investment Group, Follow [the] Seed, and other investors.
The debt facility will be deployed to Lumi’s small- to medium-sized enterprise (SME) borrowers, while the equity capital will be used by the fintech on recruitment, marketing, business development and ongoing technical improvements.
Lumi, which launched in August, is reportedly set to become Australia’s first pre-revenue business lender to offer a warehouse securitisation program.
The young lender offers unsecured business loans from $5,000 to $100,000, similar to other fintech lenders, and it draws data from a range of sources to make faster-than-traditional credit assessments of businesses. Lumi claims it can approve loans in as little as an hour.
Businesses seeking loans are required to have an ABN, be in operation for at least six months, and have an annual turnover of more than $60,000.
The founder and CEO of Lumi, Yanir Yakutiel, said that the lender is seeking to “carve out a niche” in the small business sector, with its sights set on hospital, retail and professional services businesses.
“We have built the platform to ensure loan applications are seamless, fast and secure, and we are able to extract the diamond in the rough from the businesses that banks often overlook with our comprehensive credit decisioning algorithm,” Mr Yakutiel said.
“We have the most sophisticated data universe in the country, which makes Lumi a very attractive proposition, and we’ve set up a securitisation program that will allow us to have different tranches and fund different grades of credit depending on the loan application we receive.”
The news follows the federal government’s announcement of its commitment to establish a new $2 billion taxpayer-backed Australian Business Securitisation Fund (ABSF) to “significantly enhance” the ability for small businesses to borrow funds by providing “significant additional funding to smaller banks and non-bank lenders to on-lend to small businesses on more competitive terms”.
As the ABSF is underpinned by public bonds, the government will bear some of the risk of lending to small businesses. It is expected that participating lenders will apply normal standards to loan applications.
[Related: SMEs to increasingly lean on smaller lenders]