Online SME lender, Banjo Loans, has secured an initial $100 million debt funding facility from a major Australian financial institution to help expand its reach into the larger, more advanced SME sector.

This debt funding means Banjo can leverage its growth and offer the SME market unsecured loans of between $20,000 and $1 million, via securitised warehouse. 

“With RBA data showing 95% of all SME loans are secured, and half of all small business loans are secured by residential property, this funding will allow us to push further into a sector where we know there’s currently an over-demand and under-supply of higher unsecured loans,” Banjo CEO, Guy Callaghan said.

“We were previously filling a gap in the market, now we can competitively grow it. This will only continue as we grow our product offering.”

Alternative lenders like Banjo respond to SME and market demands more proactively than the larger incumbents, according to Callaghan.

“The listed banks have predominantly focused their attention on the retail and larger corporate markets. Often, SMEs fall between the gaps as banks try to address the growing demands in the retail market and satisfy the larger corporate customers. As a result, challenger brands like ours are growing as alternative finance and banking solutions to meet demand,” he said.

“The large banks’ risk metrics generally don’t allow them to lend unsecured but rather need to secure against property. Many of our SME clients report that applying for a loan to one of the large financial institutions is an exercise in frustration. Approval times can stretch out to months. Additionally, SMEs are constantly under pressure servicing excessive debt levels and diversifying their funding base/finding new sources of funding.”

The fintech business lender has been one of few in the market to provide larger unsecured loans to bigger, more advanced SMEs via a fast, user-friendly digital process supported by its customer service team. Banjo’s self-built platform means client loans are reviewed within hours and once approved can be funded within 24 to 48 hours.

Banjo is now planning on launching a commercial asset finance solution.