Interim Finance has announced a new product for the SME loan market – and it looks a lot like an old one.
Interim have brought in a line of credit policy, long recognised in the big business, big bank relationship, but adapted it for the non-bank, SME relationship. It could provide a vital point of difference in what are challenging times for SMEs across Australia.
In what is seen as a novel product for commercial brokers, brokers can offer their SME clients a line of credit from Interim, allowing them swift access to cash when they need it, while keeping interest and overheads down.
“We’ve typically focused our energies on property secured financing to SMEs in the form of term loans,” said Trent Littleford, Credit Manager at Interim Finance. “That’s where an amount is approved and advanced in full for the duration of the loan term.”
“For some time, we’ve been contemplating a line of credit style facility to our product suite. We know that SMEs, when budgeting expenses and calculating cash flow, tend to borrow more than their requirements when its offered as a term loan.”
“So we went back to our partners, which are all brokers, as we sought feedback. We realised that there was a pretty significant gap in the market and an unmet demand from SMEs who were always on the lookout for flexibility and flexible forms of growth funding.”
“That’s where we thought a line of credit style facility, albeit not novel in traditional banking circles, is fairly novel in the non-bank space, and that it would be a great product to deploy.”
The product is so simple that it is surprising that it is not more widely available from non-banks.
“What we’re looking at is a flexi business loan which will see a borrower approved with a credit facility which can be drawn down as required with minimal fuss,” explains Littleford.
“The key feature is flexibility; we know that borrowers are after a flexible form of funding. You’ll be approved with a credit facility at a limit: but, based on requirements, SMEs can drawn down as they see fit.”
“What you get from that is better cash flow management and a more efficient allocation of working capital because you only pay interest on the amount drawn, as opposed to the total amount approved. That’s the key benefit involved.”
