The government invested in two small business lenders, while NAB introduced a new SME loan.
The Australian Office of Financial Management (AOFM), through its Australian Business Securitization Fund (ABSF), made two new investments.
It injected more than $ 100 million into two SME lenders – $ 87.5 million in GetCapital and $ 30 million in OnDeck, a peer-to-peer provider.
The government also provided $ 46 million to GetCapital in November 2020, via the “Structured Financial Support Fund”.
This is also ABSF’s second round of small business funding after injecting funds into Judo Bank in April 2020.
On Wednesday, NAB announced a new SME loan offering up to $ 2 million over 30 years – a first in Australia.
For loans secured by commercial property, the maximum loan-to-value ratio is 80%, while with a residential back-to-back it can reach 100%.
The “FastTrack Business Loan” has an advertised interest rate of 2.45% per annum, set for three years, with applicable eligibility criteria.
Ana Marinkovic, head of a small business at NAB, said it was a one-off offer.
“Small businesses are the lifeblood of Australia’s economy,” Ms. Marinkovic said.
“The terms of the loan give them the opportunity to make a pragmatic decision between potentially paying rent or buying and owning their premises.”
Bridge loans are on the rise
Specialist lender TechLend has announced that it has reached $ 100 million in bridge loan applications after launching just a few months ago.
Bridge loans “bridge” the financing gap between the sale of the home and the purchase of a new one.
CEO Aaron Bassin (pictured left, with co-founder Nick Jacobs) says the lender is filling a significant gap in the home loan market.
“We are seeing borrowers capitalize by buying new property before selling their existing property and avoiding months of life time situations and crushing mortgages,” Bassin said.
“It is a suitable solution for all homeowners, including those who may not meet the strict lending criteria required by the big banks.”
TechLend offers borrowers same day pre-approval, with an installation cost of 1.99% for the first 90 days.
The loan technically does not earn any interest for the first three months, except for a “fee” of 1.99%.
After this period, an interest rate of 5.99% per annum applies (comparison rate of 6.25% per annum *), which is 50 basis points more than when the brand was launched in July.
Up to $ 3 million is provided as short-term financing with an LVR of 75%, with loan terms of up to six months.
Photo by Christina Hawkins on Unsplash
The entire market was not taken into account in the selection of the above products. Instead, a smaller part of the market has been envisioned, which includes the retail products of at least the Big Four Banks, the Top 10 Customer-Owned Institutions and Australia’s largest non-banks:
- The big four banks are: ANZ, CBA, NAB and Westpac
- The top 10 institutions owned by clients are the ten largest mutual banks, credit unions and building societies in Australia, ranked by assets under management as of November 2019. They are (in descending order): Great Southern Bank, Newcastle Permanent , Heritage Bank, Peoples’ Choice Credit Union, Teachers Mutual Bank, Greater Bank, IMB Bank, Beyond Bank, Bank Australia and P&N Bank.
- The largest non-bank lenders are those who (as of 2020) have more than $ 9 billion in loans and advances funded by Australia. These groups are: Resimac, Pepper, Liberty and Firstmac.
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*The Comparison rate is based on a loan of $ 30,000 over 5 years. Please note: this comparison rate is only true for this example and may not include all fees and charges. Different terms, fees, or other loan amounts may result in a different comparison rate.