In a time where economic challenges weigh heavily on certain industries, particularly food and beverage (F&B) and construction, small business loan specialist Lumi takes a unique approach to supporting SMEs.
A recent CreditorWatch Business Risk Index survey, revealed, for instance, that the F&B has the highest likelihood of business failure over the next 12 months, reaching 6.83%. However, small business loan authority Lumi has a different viewpoint.
“F&B and retail are usually considered challenging industries, but based on our credit decision approach, we found that cafes and restaurants that were approved by Lumi are performing really well and are actually one of our preferred industries,” said John Clifford, head of third party at the lender.
What sets Lumi apart is its innovative credit decision algorithm, utilising real-time big data to assess loan applications beyond conventional credit scores.
“This allows us to fund a much wider range of businesses and opportunities because we’re able to tailor our credit policies to different industries, including the more volatile ones such as construction, F&B, and retail,” Clifford said. “In fact, approximately 50% of all loan applications that we assess every month are within those industries because we have an appetite for them.”
The algorithm continually enhances its accuracy, resulting in an increasing approval rate for loans. Recently, Lumi achieved a 93% approval rate for funding among loan applications subject to a credit check.
This approach is particularly beneficial for SMEs whose reputations may suffer from broad economic assessments or reliance on credit scores alone. Lumi’s method is not only responsive to changing business conditions but also challenges the negative sentiment among SMEs.
Recent surveys indicated a turning point in SME sentiment and increased demand for additional finance. However, challenges persist, with many SMEs anticipating adverse impacts on cash flow due to inflation, rising interest rates, and other economic trends.
Recognising the diverse challenges faced by SMEs, Lumi provides solutions like the Business Line of Credit, offering flexibility and acting as a safety net during cash flow fluctuations.
“[It is] our most flexible funding option yet and the ultimate safety net allowing businesses to navigate cash flow fluctuations by drawing down funds any time they need them, while only paying interest for the amount they actually borrow,” Clifford said.
Lumi has also introduced the Lumi Rate Ease, Australia's first rate-reducing business loan. This product rewards businesses for good repayment behavior, allowing them to gradually lower their interest rate each month and save significantly on interest payments.
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