The changing horizon of business lending

Peer-to-peer Lending

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Business lending is changing before our eyes. It’s just that most people haven’t realised yet.

Most Small to Medium Enterprises (SMEs), or Australian businesses’ first thought is to head to the banks when they need funding, however, banks are not always interested in dealing with you if you don’t meet there very rigid and structured criteria.

Right now, as everyone knows, banks have clamped down on lending, which is affecting even good SME businesses that in the past, found it easy to source finance.

That is why an increasing number of businesses are turning to non-bank alternatives and peer-to-peer lenders like the 70 companies within ebroker’s panel. We are seeing a significant uptake in the use of our transparent matching technology loan service, with lenders advising they are seeing an increase in applications. In other words, the market is changing – and we are responding to it.

The October 2018 Australian Bureau of Statistics data for commercial finance had some very interesting results. Non-bank lenders enjoyed year-on-year growth in several commercial lending categories, including:

  • A 4 per cent increase in commercial loans for the purchase of real property.
  • A 7 per cent increase in commercial loans for motor vehicles.
  • A 1,527.4 per cent increase in commercial loans for refinancing (albeit from a low base).

Businesses are increasing being drawn to fair, fast and flexible lenders. It is believed these numbers have double in the last 18 months.

Why would businesses seek finance from a non-bank institution and peer-to-peer lenders?

It would be simplistic to say businesses just want money wherever they can get it, however non-banks lenders take their responsibility and lending obligations very seriously.

A more accurate answer would be to say that businesses are being drawn to lenders that will give them fair, fast and flexible credit assessments.

Businesses know they need to prove they can repay loans. All they ask in return is that applications are judged on their merits, not according to rigid, one-size-fits-all rules.

Non-bank and peer-to-peer lenders aren’t just filling a gap in the market. They are actually offering superior value and that is part of the reason why the commercial finance market is changing.

Banks are steadily losing market power.

The old days of business financing are over. It is true that banks will still make most of the loans, however for many businesses; banks will no longer be the only, or the first, option.

As non-bank lenders steadily increase their market share, banks will be forced to be competitive and lift their game, which will be great for business customers. That in turn, will force non-bank lenders to find new ways to offer value to their customer base.  In this new market, power is slowly, but surely, moving away from the big banks which is great news for SMEs and new businesses.

ebroker is Australia’s first fully independent, transparent matching platform where anyone can find and compare unsecured small business loans. Now working with over 70 non-bank lenders. Find out how we can help here:

Heath Fitzpatrick, COO, ebroker

Growing up within a small family business, and then moving into starting a number of his own, Heath has a lifetime of exposure to small and medium businesses. After securing qualifications, he started working in his family business then his own; maximising efficiency and streamlining processes before joining the finance industry.