A new feature that automatically decreases the interest rate on business loans for certain SME borrowers has been launched by the fintech lender.
Fintech lender Lumi has launched a new product that aims to “alleviate the pain of high interest rates” and their impact on SMEs’ cash flow and ability to borrow money.
Released today (1 November), the Rate EaseTM product feature aims to gradually drop the interest rate on new business loans for eligible businesses that attract a higher interest rate due to their financial circumstances.
Eligible customers on a new Lumi Small Business Loan of at least $25,000 and on an interest rate of 29 per cent or higher may be eligible for the feature.
After the borrower has made four consecutive weekly payments, their rate will automatically decrease monthly for a period of up to 12 months (or for as long as they make repayments on time).
The interest rate reduction percentage varies depending on the loan amount, term and approved interest rate, however, Lumi has suggested that if a customer applies for a Lumi Business Loan of $100,000 on a 24 month-term – and is making weekly repayments of $1,394 – they could save over $3,000 or 7 per cent in interest.
Eligible customers can reportedly save up to 11 per cent in interest if they make their repayments on time, it added (based on a loan over a three-year period at 44.5 per cent APR).
Partners can earn commissions of up to 6 per cent on Lumi Business Loans with Rate EaseTM.
The SME lender said it had launched the new feature following customer and partner feedback.
According to John Clifford, head of third party at Lumi, the lender aims to reward loyalty and help save SMEs more money.
“In this challenging market of rising inflation and reduced consumer spending, Lumi Rate EaseTM could be the financial catalyst SMEs need to access much-needed funding, which they would otherwise not get approved for or could simply not afford,” he said.
“For our broker partners, this means they can finally offer their higher APR paying clients a market-first business lending product that rewards them with a rate decrease just for keeping their payment promises.”
Speaking of the new launch, Lumi founder and chief executive Yanir Yakutiel commented: “At Lumi we fund potential, and we believe in rewarding long-term relationships with both our customers and partners.
“We want them to thrive, not just survive, so we think it’s only fair to reward good borrowing behaviour with a better price and that’s exactly why we launched Lumi Rate EaseTM.”
[Related: Lumi raises $15m from new strategic investor]