What do SMEs look for in a funder?

Here's what two non-bank bosses have to say

What do SMEs look for in a funder?


By Mina Martin

Last year, the number of brokers who have diversified into commercial lending exceeded 6,000, driven by SMEs’ demand for alternative funding sources.

But just what do SMEs look for in a funder?

In the post-pandemic world, everyone expects things to happen faster – and funding decisions are no exception.

“Increasingly, SMEs prioritise the speed of funding to enable opportunity cost,” said David Verschoor, chief executive at Grow Finance.

Time is of the essence in the current environment.

“The sooner a small business can access funds, the sooner it can take steps to get growing,” said Cameron Poolman, chief executive at OnDeck. “An opportunity to purchase discounted stock, for example, can be very time-sensitive.”

SME owners also have extremely busy schedules and would prefer a simple application process.

“Small business owners simply don’t have the time to pore over lengthy loan application forms,” Poolman said. “This is why OnDeck only asks for six months’ worth of bank statements to be uploaded to our secure online portal – it’s very simple and very quick.”

At OnDeck, applicants approved for its Lightning Loans can have the funding in as little as two hours.

“Grow can often provide access to capital very quickly with less red tape, which includes flexible solutions via a single assessment process,” Verschoor said.

Another key factor to attract and retain SME clients is flexibility.

“It’s important for brokers to understand their clients’ needs and work closely with lenders to present viable long-term options that avoid boxing customers into high-interest, inflexible products or terms,” Verschoor said.

Small operators and sole traders also appreciate it when lenders do not require them to provide security for a loan – something non-banks can allow for.

“Small businesses are often asked by mainstream lenders to stump up residential property as security,” Poolman said. “This blurs the line between private assets and business assets, which is not good business practice. Brokers can be confident that their small business clients don’t face this risk with OnDeck.”

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