Australia

Westpac is increasingly assessing cash flow rather than hard assets when providing funding to small businesses, as technological disruption and shorter business cycles create new challenges for bank lending.

Lyn Cobley, chief executive of Westpac's Institutional Bank, said the group was being forced to look beyond industry fundamentals and traditional measures of growth to understand business life cycles, and decide where and how the bank should lend and invest.

The Commonwealth Bank of Australia (CBA) has launched a new business analytics platform that aims to provide small-to-medium enterprises (SMEs) with access to big data. The bank's new Daily IQ 2.0 platform brings together online tools and data feeds from CBA's pool of 1.2 billion monthly transaction records, which the bank said will allow SMEs to model future scenarios based on current financial and industry data, in addition to allowing performance monitoring in real-time.

The Australian division of European-based online lender Spotcap has recently announced a partnership with New Zealand’s Heartland Bank, which will be providing the fintech with an AU$20 million funding facility to help grow Spotcap across Australia and expand into New Zealand.

Spotcap has lent $35 million to Australian small businesses over its first 19 months of operations, with the book growing by 450 per cent over the year to December 2016 as the fintech expanded its distribution capability through deals with broking networks.

This week’s inquiry into small business loan practices saw the big four banks in the spotlight yet again this year, and the focus was on loan limits, communication and fairness.

Blockchain continues to generate a huge amount of interest and hype within the global capital markets, and now we see something tailored for marketplace and alternative lending coming from Sydney. The use of blockchain (distributed ledgers) provides a new approach for data management and transparency, which will become a solution to many of the inefficiencies that impact the financial industry.

Fintech is synonymous with disruption, but in the Australian small business lending market, new market entrants don’t have much to disrupt. Lack of financing, difficulty managing cash flow and forced long payment terms from big business suppliers are high on the list of SME pain points, so how have fintech companies alleviated these while still driving innovation?

National Australia Bank has entered the online SME lending market with the launch of the NAB QuickBiz Loan, which allows customers to borrow up to $50,000 in unsecured funding via a new online application process.

Having been spurned by banks, many small business owners are finding a funding lifeline with non-bank lenders. Specialist asset financiers, debtor financiers, factoring companies as well as an ever increasing number of marketplace lenders now offer a bewildering array of options to SMEs.

The Scottish Pacific SME Growth Index highlights two significant trends in how SMEs are financing their businesses.

A lender that specialises in asset and equipment finance has attributed its massive growth in SME loan applications to the federal government’s recently introduced tax relief incentive.
NLG Leasing’s recent analysis of its loan portfolio revealed a 400 per cent increase in loan applications to SMEs for the 12 months to October 2015.