4 reasons SMEs turn to alternative lenders

A new business lender said more and more businesses are moving away from the bigger banks

4 reasons SMEs turn to alternative lenders


By Rebecca Pike

A new business lender says more and more SMEs are turning to alternative banks for their needs.

National manager at Limba, Olly Guilleaume, has worked in the industry for more than 30 years, holding general manager and Executive positions with major banks including BankWest and Suncorp.

He said there are several reasons businesses are turning away from the bigger banks, including the high percentage of loans refused each year.

He said, “Alternative lenders offer several advantages over banks. For a start, they have higher approval rates and a faster application process, but there’s also a more personal and supportive approach.”

The top reasons businesses might seek out finance include maintaining short-term cash flow or liquidity, replacing or purchasing additional equipment and machinery, or pursuing expansion opportunities.

Guilleaume said these four reasons are key in explaining why alternative lenders are favoured.

1.            They are faster

Alternative lenders are likely to shorter turnaround times, with easy and fast application processes.

He said, “Businesses need to make decisions quickly. I recently assisted a business in purchasing a significant amount of stock that was being offered at a heavily reduced price by the supplier. The customer had only a matter of days to come up with the funds, which the business wasn’t going to have within the timeframe.

“By providing the loan, the customer was able to secure the stock and improve his profit margin on every job completed over the following 6 months.

“The customer’s bank could not deliver the outcome within the timeframe, so he turned to Limba, an alternative lender, for assistance.”

2.            They are flexible

Small businesses often have unique needs and alternative lenders are able to work towards custom solutions that support these, from a unique proposal to a no early pay-out fee.

He said, “I see many businesses struggling with finance that simply isn’t suitable for them. At Limba, we are flexible.  We offer a wide range of services, and the customer speaks directly with our decision makers throughout the entire process.

“We aim to fill the gaps in credit policy and procedures left by the big banks for established businesses when growth opportunities present themselves.”

3.            They are risk free

Guilleaume said, “I see many quality businesses denied access to credit because they don’t have a property, or they are in dispute with another party.

“Often, alternative lenders offer unsecured loans meaning you don’t need to own a property and your personal assets aren’t at risk.

“Financing for survival purposes is a very slippery slope for small businesses and something we at Limba don’t encourage without having a clear financial plan in place to assess the impact of adding a loan repayment into its cashflow projection.

“We want our clients to be confident that the loan will work for them.” 

4.            They offer support

Guilleaume said the primary goal of alternative lenders is to support small businesses and assist them in filling in the gaps left by larger financial institutions.

He added, “We genuinely want to learn about the customer’s business and its opportunity to gauge whether we offer a suitable solution. We actively engage our quality finance broker network to assist the customer in finding the best product and lender for their situation.”



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