Small businesses dominate Australia’s economic landscape. They comprise 97.4% of all companies, providing a livelihood for millions.
Yet, many struggle to procure the funding needed to grow their operations.
Why? Banks assign a higher risk premium to small business loans. They are justified in their guarded approach – according to the Australian Bureau of Statistics, 50% of all small businesses fail within five years.
Often, banks will refuse to lend to small businesses if they don’t meet stringent requirements. On top of this, they cannot be counted upon to act quickly enough to meet sudden cash shortfalls.
However, this doesn’t change the fact these small operations power our economy. How can they succeed without help from primary lending institutions?
Increasingly, they are turning to online lenders for access to badly-needed capital.
From supplying venture capital to fronting companies cash so they can make payroll, they are filling demand left untapped by risk-adverse banks. By the same token, the internet is home to many predatory and fly-by-night operations.
It can be hard to know which ones can be trusted with your information.
That’s where we come in: in this article, we’ll review five Australian online lenders who have built a sterling reputation for themselves, one loan at a time, and are offering all-purpose loans including vehicles for your business.
Entrepreneurs approach banks for funding because they are perceived to be stable and trustworthy. Capify exemplifies both of these traits – around for more than a decade, they have lent money to 24,000 small and medium-sized enterprises, and have deployed more than $650 million to businesses globally.
More than 15,000 of them have used Capify multiple times; when any enterprise does this much repeat business, it’s not inaccurate to say they must be doing something right.
Upon closer examination, it’s not hard to see why – they have gone to great lengths to minimize customer hassle.
Capify doesn’t require customers to provide tax returns, financials, or business plans for any ask that is less than $70,000. Further, loan approvals typically take less than 24 hours.
With loans available from a minimum of $5,000 to a cap of $300,000, they can serve convenience stores as easily as they can technology startups.
We are also fans of their repayment terms – for example, their daily plan can be structured as a percentage of ETPOS/credit card sales.
For merchants whose revenue fluctuates seasonally, this avoids the awkward situation of not having enough cash on hand to make a fixed monthly payment when sales are slow.
Capify has enjoyed a great deal of success in the past decade. However, to understand how underserved the small business lending market is in Australia, consider the performance of Prospa.
Founded in 2011, they have become this country’s top online lender in just seven short years. It has lent over $750 million in Australia over that stretch, won the Lending Innovator of the Year at the 2017 FinTech Business Awards, and has achieved a customer satisfaction rating of 97%.
Even their Trustpilot score is on point – with a rating 9.8/10, you won’t find an online lending firm in Australia that is more trusted or loved than Prospa.
How have they come to be so adored? By offering terms as long as two years, payments tailored to cash flow, and an application process that is quick and easy.
Applying online takes no longer than ten minutes, and decisions are rendered in hours. Greenlighted loans are issued within 24 hours.
It’s no wonder Prospa has grown as fast as it has.
Intrigued? Check out Prospa’s detailed offering – they may be the right firm for your company’s needs.
Nothing can disrupt the cash flow of an otherwise solvent business than a customer who drags their feet on an invoice. All it takes is one deadbeat customer to make you look like an idiot to creditors and a bad boss to employees.
Thankfully, firms like Finstro specialize in filling gaps in the cash flow of successful businesses. In less than two years, this young upstart has become a seven-figure company and has cultivated a Trustpilot score of 9.6/10.
Finstro offers two products – firstly, they offer loans up to 80% of an outstanding invoice. When the client pays their invoice, the borrower then pays off the loan. Secondly, they sell cash flow management software.
This allows small business owners to manage their finances in an intelligent manner, making cash shortfalls less likely.
Unsecured Finance Australia
Sometimes, the structure of the typical business loan just doesn’t fit the needs of the borrower. Some purchases are too expensive for a 12-month term or happen on an ongoing basis that can’t be anticipated by a standard loan.
These are problems Unsecured Finance Australia have aimed to solve. Founded in 2015 by two veterans of the Australian financial industry, they offer specialised equipment loans and line of credit in addition to standard loans.
Their loans and lines of credit range in size from $5,000 to $300,000. Lines of credit are revolving, providing business owners with ready access to capital and the ability to make payments on their schedule.
Even better, their equipment loans come with 60 months (5 year) terms. Given their expense, the ability to spread the cost over a long period makes it easier for borrowers to scale their business quickly.
Unsecured Finance Australia has also made ease of use a priority. With a streamlined application process and minimal documentation required, it only takes five minutes to apply for a loan.
Approval happens in hours, with the cash wired to the borrower’s account the same day if the application is submitted before 4 pm Monday – Saturday.
When one thinks about small businesses, we often picture a convenience store or a restaurant. In recent years, however, the freelancer revolution has spawned growth in one person operations.
Their needs often do not meet the $5,000 minimum required by many private lenders.
Ferratum Business is one company which has recognised the need for smaller business loans. With a minimum loan threshold of $2,000, they have provided access to capital for solopreneurs.
They also offer the capability to lend up to a maximum of $150,000, making them a great option for more established small companies as well.
The demand for small business venture capital is real
The explosive growth of fintech firms like Capify, Prospa, and their contemporaries has proven there is a real hunger for quick and easy financing solutions for small businesses in Australia, for purposes like manpower, offices and vehicles.
Their rise has occurred in spite of the higher interest rates these firms charge; given the revenue produced, it is fair to say the online finance boom in this country has plenty of room left to run.