With the proliferation of online lending, small business customers expecting a speedier loan turnaround time
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SMEs are becoming increasingly aware of the lending options available online, according to the latest small business lending analysis.
The Q4 2016 Disruption Index – a joint analysis by Moula and Digital Finance Analytics (DFA) – has shown that 14.1% of surveyed businesses were familiar with the choices out there within the SME lending segment. This was an increase of more than 230% from last year’s survey results of 4.2%, meaning that around 300,000 businesses are now aware of the choices within the SME lending industry.
This greater awareness has been driven by good non-bank SME lenders investing in educating small business customers on how to find the right solutions, Aris Allegos, CEO and co-founder of Moula told Australian Broker.
“Dedicated teams, digital and above the line marketing and key strategic partnerships with specialists in small business have been key to this ongoing education.”
The survey also found that SMEs expect a loan assessment turnaround of 5.4 days, a figure which is trending lower as online predominates, Martin North, principal of DFA, said.
“This is based on the response from the SMEs in the survey to the question, 'How quickly would you expect to get an unsecured loan from a lender?' looking at the days between initial application and money in the account,” he said. “We took the average of the response times which ranged from less than 24 hours to three weeks.”
Moula promises an average loan turnaround time of 29 hours. For simpler structures such as sole traders and companies, loans are executed within 12 hours of the initial application. However, more complex business structures such as trusts can impact the average speed due to additional compliance processes.
The firm’s underwriting process assesses creditworthiness through real-time credit decision-making by taking in relevant data provided by the borrower through sources such as cloud-based accounting solutions, said Allegos.
“This proprietary technology allows us to assess accurate business data over a relevant time period and extend funding responsibly.”
The Disruption Index uses data from 26,000 small business surveys provided by DFA, measuring SME service expectations, awareness of non-traditional lending options, use of smart devices, etc. Moula also adds its own data on SME conversions, average loan amount approved and speed of application processing.
“The survey is based on an omnibus and we add 500 new ones each week, and drop off those from a year ago, to maintain the sample size. We include questions on their digital capability, financing arrangements and borrowing needs. We have more than 100 elements in the database of responses so can drill down across the SME base,” North said.
