New research by lend.com.au has found four out of five business owners do not believe the major lenders will deliver on the government’s SME Guarantee Scheme fast enough for their business to survive the pandemic.
7o per cent of businesses surveyed said they need the loans approved in order to stay afloat, while almost a third (32 per cent) say they need funds by early May or will face closure.
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. While one in three businesses believe that non-banks will deliver loans faster than traditional lenders.
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.
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.”
Baker said 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.”
Baker says the best option would be 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.
“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.”
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