Non-bank lender Banjo secures $100m credit facility

ByRichard C. Sloan

Mar 2, 2022

The fintech, which was founded by former NAB colleagues Andrew Colliver, Julian Hedt and Stephen Murphy in 2015, offers business loans between $20,000 and $1 million, with a simple annual interest rate starting at 9 .9%.

Previously, it only offered secured loans at the higher end of that spectrum, but the new warehouse allows it to extend that to unsecured loans.

The new facility follows Banjo’s $5 million fundraising in December 2020. At the time, the company’s three founders owned just under 50% of the business.

Mr Callaghan did not reveal the highest – or average – interest rate that Banjo charges customers, but acknowledged that its rates were higher than what small businesses could get at a big bank.

The big difference, Mr Callaghan said, was that the online lender offers unsecured loans, which can be approved in as little as 24 hours for new borrowers.

“With our financing structure, we will never be as competitive as the banks, but we are filling a void,” he said.

“Our funding costs are higher… They can get these loans from a bank, but it takes weeks and weeks and the banks have to pull all the information from disparate systems, and they will have to provide collateral for the loans. ready…

“We can pull all the information instantly, we look at over 3,500 data points on every transaction, and even if the answer is no, we can give it to you in days, rather than weeks or months.”

Last year’s Productivity Commission report on small business access to finance said that although there are many lenders and products available to SMEs, there was “a gap for unfunded financing. secured between $250,000 and $5 million, with few lenders willing to offer these loans.”

Mr Callaghan said Banjo’s default rate was around 2%.

While the company primarily processes loans in the upper end of its $20,000 to $1 million range, it is investing in automation and machine learning technologies to make processing loans in the tens of thousands more efficient.

It also plans to launch a commercial asset finance product.

“It’s not just the size of where we can go with the facility, but the parameters around the products and offerings that we can do that will help us grow and also SMEs,” Mr. Callaghan.

In addition to the warehouse, Aura Funds Management is Banjo’s mezzanine funder.

“On the side there is also a bilateral funding agreement … with Aura Funds Management and Alexander Funds Management,” Mr Callaghan said.

“I guess we can keep pushing [our debt facilities] up to $150 million.

The new warehouse also allows Banjo to “sharpen its prices”.

“Pricing is still king there with businesses hurting and wanting to grow,” Callaghan said.