Quick, easy, no need for collateral, and a dislike of the banks there are plenty of reasons why non-bank lenders are proving attractive to SMEs.

Virtually non-existent two years ago, the fintech lending in Australia in 2015 was $466 million which was more than five times the previous year ($83 million).

And overall the market for SME lending in this country is estimated to be around $250 billion, so there’s no surprise as to the level of interest in what was a traditionally neglected sector.

In Tyro’s SME expert guide to business loans in Australia, finance expert Neil “The Bank Doctor” Slonim explained why fintech lenders had plenty of advantages over the big banks:

1. Quick. They can make decisions within days, even hours, whereas banks can take weeks, often months, to make a call.

2. Easy to deal with. Fintech websites are user friendly. They can be accessed by the borrower at any time or place avoiding the need to travel to the bank for face-to-face for meetings with people they don’t know well.

3. Lending is unsecured. Many SMEs believe unless they are able to offer property security, the bank really isn’t interested in them. Some business owners, who do have a house they could offer as security, are willing to pay a little extra in interest in order to avoid the hassles associated with providing property security.

4. SMEs don’t love banks. Satisfaction rates remain at low levels. This has made the task of the new fintech lenders much easier as they are able to play on this negative sentiment.

So what do you look for in a fintech? Slonim said look for one which:

  • Has strong financial backing.
  • Is run by people who are motivated by the right reasons.
  • Is fully transparent about their offering especially re: fees.
  • Can demonstrate a successful track record even if it is only for a short period.
  • Has people you can talk to when you need.
  • Has a genuinely distinctive offering.
  • Has liquidity management options (for balance sheet lenders).

Download your free SME expert guide to business loans in Australia here.

Tyro offers unsecured business loans based on your settlement history. Tyro Smart Growth Funding is ready to use, comes with a flat fee, and no need for collateral.

Find out more about Tyro Smart Growth Funding.