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CBA has unveiled a new digital lending solution that will enable small businesses to use their outstanding invoices to access short-term capital.
The Stream Working Capital is a round-the-clock solution that allows businesses to utilise their outstanding invoices as loan security to get funds.
Mike Vacy-Lyle, group executive of CBA Business Banking, said cash flow is one of the key issues facing small businesses and this new solution will provides faster access to financing given that manual processes are reduced by up to 80%. The solution also has a faster approval process which takes only 72 hours.
"While small businesses traditionally use fixed assets such as property to secure an overdraft or loan, we have developed Stream Working Capital which will allow customers to access funds by using their outstanding invoices as loan security. The loan size reduces automatically as invoices are paid so customers never pay for credit limits they don’t need," he said.
CBA partnered with lending platform Waddle to set up Stream Working Capital. The solution will take advantage of a live feed of customer data via cloud accounting software such as Xero, to underpin a business customer’s working capital needs.
Credit limits for the solution will be tailored to the business and will be based on the value of current outstanding invoices. CBA will not charge an establishment fee. Interest will be calculated daily on the outstanding balance and businesses will only pay interest on the amount they draw down.
Clare Morgan, executive general manager for business lending, said the solution simplifies the working capital process for small businesses.
"This new digital solution means businesses can get faster access to cash flow to cover short-term operational needs and be better placed to leverage fixed assets for longer term strategic goals and investments," she said.
Morgan said allowing businesses to use invoices to access credit addresses the issue of many business owners who want to be able to hold more inventory and build relationships with more suppliers to mitigate supply disruption.
"Businesses can now access cash locked up in their invoices to be able to pay suppliers or hire employees. It’s an essential part of helping small businesses recover and grow as they continue to navigate a new operating environment during the pandemic," she said.
