New research reveals businesses’ lack of confidence in lenders to deliver the new Government-backed loans in a timeframe that will guarantee their survival. Four in five business owners (79 per cent) believe that banks will not be able to approve and settle loans under the Coronavirus SME Guarantee Scheme as quickly as they need it. Just one in three businesses believe that non-banks will deliver loans faster than the banks. It indicates that fast, AI-powered lending platforms could be the solution to a potential lending crisis for SMEs.
The findings come from a survey of an independent panel of 207 business owners, commissioned by lend.com.au, one of Australia’s fastest and most sophisticated business lending platforms. It sought to gauge the level of confidence among businesses in lenders who have been approved to offer the Government’s Coronavirus SME Guarantee Scheme, and who are receiving the RBA’s facility of low-rate loans during the pandemic.
From the survey, Lend.com.au also found that 70 per cent of business respondents need the loans to survive. Among these, 12 per cent admitted the timing was already too late for their business, and 32 per cent need a loan by the first week of May.
The findings come while some banks are still yet to deliver the loans. While the Coronavirus SME Guarantee Scheme was announced on 22 March, ANZ, Bankwest, Bendigo and Adelaide Bank, and Suncorp are still in the process of finalising their loan details.
The survey also revealed that confidence in non-banks to deliver the loans is equally low: just 34 per cent of business respondents believed non-banks could approve and settle loans faster than the banks.
Bill Baker, CEO of Lend Capital, says: “There is currently the very real, and ongoing, issue of bottlenecks in loan approvals among the banks. However, the biggest problem for borrowers is beyond that. There is no way that any business will know which lender will approve them – borrower credit risk differs between lenders, and each bank and non-bank has its own lending criteria. Without knowing which lender’s criteria matches their credit profile, a business will go through the time-consuming process of making an application with one lender, waiting weeks in the queue for the result, and approach another if they are not approved. They will be forced to continue shopping around between lenders in an effort to secure much-needed funding.
“Ultimately, there is a lot of confusion among borrowers. Finding the right lender with the right product is the longest part of the approval process. Once a lender matches the customer profile to its lending criteria, the process is very straightforward.”
Bill says that the only feasible solution in the current climate is a partnership between Government-approved lenders and AI-powered lending platforms that can match a borrower to a lender’s product in as little as 24 hours – in effect doing the ‘shopping around’ for the borrower. Lend.com.au, for instance, uses its lenders’ algorithms to assess the risk of borrowers, profiles them, matches them to a lender, and secures settlement in four days, on average. The platform already distributes more than $120 million in loan applications to Australian lenders monthly.
Bill concludes: “Small-to-medium businesses are the backbone of the Australian economy and they need the money now. For businesses in certain sectors, delays in these loans may render the Government’s JobKeeper wage subsidies ineffective for holding onto employees, as a large proportion need to cover other significant costs to remain operable over the coming weeks.”
Founded in 2016, Lend Capital has innovated the way brokers, business borrowers, and non-bank lenders interact through its fast and sophisticated platform for unsecured SME loans, lend.com.au, and broker platform partners.lend.com.au. Using a combination of AI and analytics, the Lend technology is simple for borrowers and brokers: borrowers fill in a 10-minute form and update their bank statements; the platform assesses the borrower’s risk, profiles them, matches them to a lender and secures settlement in four days, on average. A uniqueness of the broker platform is LendScoreä, a fully automated tool that provides brokers with a score on the likelihood of a borrower’s loan approval. Lend.com.au currently distributes more than $120 million in loan applications to Australian lenders monthly and has a network of around 1000 brokers.