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SME lender launches new chattel mortgage product

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Reporter 5 minute read

OnDeck Australia has launched its first secured business loan, rolling out a new chattel mortgage product for equipment finance purposes.

The SME lender, a subsidiary of US company OnDeck Capital, has revealed today (2 October) that it is expanding its finance solutions to SMEs and their brokers by offering a new loan product that is secured against the value of the equipment and its potential to generate ongoing revenue.

Available on 24, 36 and 48-month terms, the risk-based pricing model product (with an annual percentage rate ranging between high teens to mid-20s) is available for amounts of between $10,000 and $100,000 and can be used for non-primary assets, such as equipment and fit-outs.

According to the SME lender, the decision to roll out a new chattel mortgage solution came after identifying that nearly a third of its existing borrowers were using its unsecured loan products to purchase equipment.

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Chief executive officer of OnDeck Australia Cameron Poolman commented: “Additional feedback from our brokers and their customers indicates they want business equipment loan products with longer-term amortisation to match their financing costs to the lifespan of the equipment, which usually extends beyond 12 months.”

He added that while some traditional lenders lend money against the resale value of the business asset, the chattel mortgage product does not place any maximum age restrictions against any asset class but takes into consideration both the value of the equipment and its potential to generate revenue for the business.

Speaking to The Adviser about the new product, OnDeck Australia’s head of sales, Michael Burke, elaborated: “Our primary focus is around the financial health of the business, first and foremost. When we look at understanding the value of the equipment, it is more around how critical that equipment is to the ongoing viability of the business. So, the greater the criticality, the more comfortable we are with the collateral type. It is around what is the financial health or the cash flow of the business. They are really the drivers, rather than what is the straight valuation.”

Mr Poolman concluded: “We want small business in Australia to succeed. To do this, we must support and invest in solutions for them. Our focus is on a small business owner’s overall financial health, and not just purely on the short-term resale value of its business assets. As such, our equipment finance solution places no maximum age restrictions against any asset class. It provides small business the finance to purchase necessary equipment, frees up cash and gives owners more opportunity to focus on what’s best for their business.”

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