How fintech lenders can help small businesses jump short-term hurdles

8 October 2018

SME’s are increasingly taking advantage of the convenient short term finance opportunities that fintech lenders provide.

At the core of it all fintech (financial technology) lenders and banks provide the same basic function – they both offer financial products to individuals and businesses.

So what’s the difference between a fintech lender and a bank?

The major difference however is that fintech lenders conduct all their business solely online using financial technology, and do not have bricks and mortar premises.

Their offerings are not as extensive as banks, they deal mostly in loans, and their loan terms are slightly different.

Fintech lenders offer short term loans that attract a higher rate of interest compared to traditional lenders.

The trade- off comes with the fintech lenders’ ability to provide lightning fast approvals, simplified loan application processes and low doc options.

These benefits can be attractive to business owners who require access to fast, short term finance.

Business owners can use this sort of finance for quick expansion, renovations/repairs, or event to help with short term cash flow management.

 

Here’s a quick summary

Common uses of fintech lending solutions by small businesses include:
1. Urgent repairs
2. Rapid expansion
3. Quick resources needed for a new job
4. Cashflow shortages due to unpaid accounts

 

Benefits of fintech lending include:
1. Short turn around time
2. Low doc
3. Generally no need for equity/security
4. Short term lending – not being locked in for long terms commitments

 

Considerations
1. Fintech lenders generally have higher interest rates than traditional lenders
2. Fintech lenders do not have ‘bricks and mortar’ locations, with the entire process conducted online, meaning sometimes finding information and troubleshooting can be harder. A broker can help navigate this process for you.

 

Contact the team at Shakespeare on 9321 2111 to see how fintech lending solutions may apply to your individual situation.

 

Information contained in this article is based on data from the Australian Small Business and Family Enterprise Ombudsman and theBankDoctor.org.

Infographic extracted from “Borrowing from Fintech Lenders” 2018. Source: The Australian Small Business
and Family Enterprise Ombudsman and theBankDoctor.org

 

General disclaimer: Our firm provides the information on this website for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation. Tax articles on this website are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy, or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose

.

---