Banjo Loans secures $100m debt funding facility to offer SMEs loans

Guy Callaghan, Chief Executive Officer of Banjo Loans

Banjo Loans, an online SME lender, announced it secured an initial $100m debt funding facility from an Aussie financial institution to expand its reach into the more advanced SME sector.

This debt funding means Banjo is now able to leverage its growth and offer the SME market unsecured loans of between $20K and $1 million, via securitised warehouse.

Banjo Loans looking to meet market shortages

Banjo CEO, Guy Callaghan says, “RBA data shows 95% of all SME loans are secured, and half of all SMB loans are secured by residential property, this funds allow us to push into a sector where we know there’s an over-demand and under-supply of higher unsecured loans.”

“We were previously filling a gap in the market, now we can competitively grow it. This will only continue as we grow our product offering to greater untapped sectors.”

Having secured the initial $100 million debt funding facility from a major financial institution, Banjo is also working with Aura Funds Management as the mezzanine funder.

The lack of larger unsecured loans is echoed by Productivity Commission Report which states “While the SME market is well covered by various lenders, there appears to be a gap for unsecured finance between $250K and $5m, with few lenders willing to offer these loans.”

Banjo Loans to take advantage of financial bureaucracy

According to Guy Callaghan, alternative lenders like Banjo respond to SME and market demands more proactively than the larger incumbents. “The listed banks have predominantly focused their attention on the retail and larger corporate markets instead of SMEs.”

“Often, SMEs fall between the gaps as banks try to address the growing demands in the retail market and satisfy the larger corporate customers. As a result, challenger brands like ours are growing as alternative finance and banking solutions to meet demand,” he says.

“The large banks’ risk metrics generally don’t allow them to lend unsecured but rather need to secure against property.  And culturally in Australia we’re very property-focused.”

“Many of our SME clients report that applying for a loan to one of the large Financial Institutions is an exercise in frustration. Approval times can stretch out to months.”

“Additionally, SMEs are constantly under pressure servicing excessive debt levels and diversifying their funding base/finding new sources of funding.” See Banjo Research.

Banjo Loans tipped to succeed in the market

Brett Craig, Director of Aura Funds Management made these remarks on Banjo, “We are happy to transition our exposure in Banjo into the warehouse and expand our investment.”

“Banjo’s risk management has been strong since we started funding them, and we are of the view that the business is well positioned to grow significantly in the near term.”

Banjo has been one of few to provide larger unsecured loans to more advanced SMEs via a fast, user-friendly digital process supported by a highly experienced customer service team.

With a core understanding of the SME value chains across sectors Banjo is able to respond to market demands more proactively than the larger incumbents. It’s self-built platform means client loans are reviewed within hours and once approved can be funded within 24-48 hours.

Having held steady through the raging global pandemic, Banjo is now experiencing strong growth and is planning on launching a commercial asset finance solution.