Lender trials merchant cash advance through brokers

Speaking to The Adviser, Mr Goldin elaborated: “There are very few people in the Australian market who have a true merchant cash advance product.”

Noting that Capify had rolled out a similar offering in the US, Canada, the United Kingdom and now Australia, Mr Goldin said that the product “works with the customer”.

“It's really a great product because it allows any SME that accepts eftpos and card payments to have a variable repayment. So, rather than a fixed payment on a daily, weekly or monthly basis, this is a percentage of their sales until they pay off the cash advance. This means that, if their sales slow down, their payments slow down, so we only get paid if our customer gets paid,” he said.

Mr Goldin added that this works particularly well with businesses that are affected by seasonality, as it “reduces the repayment pressure”.

Following on from a recent $135 million cash injection from Goldman Sachs Private Capital to “accelerate the growth of its lending business to Australia’s small and medium-sized enterprises (SMEs) through its business loan and merchant cash advance products”, Mr Goldin told The Adviser that the broker pilot formed part of the business’ aim to grow its presence in the third-party channel.

“We’re actually increasing our footprint throughout Australia – we’ve hired (and are in the process of hiring) business development managers through the country to make sure we have local coverage and can significantly increase the volume of business that we do with brokers.”

The CEO also revealed that the SME lender was also “actively seeking potential synergistic acquisitions” in light of other recent capital raise, stating that this could be in the form of “a strategic product or a strategic distribution channel” that would help accelerate growth.

“Sometimes it’s better to buy versus build,” he said. “Rather than start from scratch [we could] instead buy the company with subject matter expertise in that particular product and distribution channel already in place.”

Mr Goldin added that these potential acquisitions would be for “either a new SME product or new SME distribution channel”.

He concluded: “Looking forward, we will be rolling out our new partner portal, giving us even more enhanced technology for reporting for our broker channel; we are working on certain new technology available in the marketplace that will make our decisioning process faster and more automated; rolling out new products; and increasing our local presence in various regions of Australia for the brokers.”

[Related: SME lender eyes growth following $135m credit line]