Lender reports surge in startup loan product

by Miklos Bolza14 Mar 2017
Specialist lender Bluestone Mortgages has announced a 50% increase in volume of its Business Easy product in the twelve months prior to February this year.

This upwards trend correlates with the growth of the small & medium enterprise (SME) sector with this specific product aimed at individuals, trusts and companies which have been trading for less than one year.

“Business Easy is highly appealing to start-ups and self-employed applicants as it only requires a three-month ABN to secure a loan, versus the traditional 24-month requirement,” said Royden D’Vaz, national head of sales and marketing at Bluestone Mortgages.

“In real terms, this means that a previously disadvantaged group has a financial solution that supports their requirements and doesn’t discriminate based on trading history – hence why the product uptake is significant, and is expected to increase as market demand increases.”

The success of this product has paralleled the success of Bluestone overall with total loan volume growth doubling year-on-year since 2014, D’Vaz told Australian Broker.

“The self-employed sector is a big part of what we do. Sixty-four per cent of what we write comes from the self-employed products. Business Easy is particularly attractive because it’s for borrowers that only have a startup business.”

As long as the borrower’s income is growing in their three-month bank statement, Bluestone can offer a loan to that client. Loans range from $100k to over $1m with the average loan size sitting at around $440k.

“To have a product like this, it’s particularly attractive to brokers with customers who are just starting up a business.”

“What it’s done is it’s made us stand out. It’s created a real niche and when brokers hear about it, they’re just really surprised that we can even do that.”

D’Vaz said Bluestone was committed to ensuring the product was qualified under responsible lending guidelines through proper due diligence on the customer without detracting from the flexibility required by self-employed startups.

Kristina Spencer of Finance Solutions Central in Queensland has recommended Bluestone’s Business Easy product to one of her clients, the Pinzon-Leal family, to help them purchase property.

“In this situation, Neferson Pinzon-Leal had a well-established family business overseas, but only had his commercial lighting franchise operational in Australia for four months.  This precluded them from being able to secure finance through traditional lenders for his property purchase in Brisbane,” she said.

As this example shows, the product is flexible while being designed for self-employed borrowers, D’Vaz said.

“The recent LOC facility and Part 9 and 10 impairment adjustments help extend Business Easy’s full suite of features and benefits. The line of credit facility enables benefits day-to-day operations by alleviating immediate cash-flow issues.”

Without a need for loan mortgage insurance, the borrower does not need to meet the lending guidelines of LMI providers, he added. Furthermore, adjusting the way in which Bluestone views borrowers in a Part 9 or Part 10 agreement allows for greater flexibility and access to faster, more customised lending.

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