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The SME lender has extended the maximum borrowing tenor for two of its main business loan products to five years.
Non-bank lender Banjo has extended the maximum tenors on its Business Loan Express and Business Loan Excel products to five years in a move to help SMEs manage their ongoing repayments and reduce financial strain.
The products previously had maximum tenors of three years for loans up to $2 million and one year for loans up to $250,000.
However, given ongoing economic pressures, the lender has brought out longer tenors to ease cash flow pressures on small- to medium-sized enterprises (SMEs) so that they can “focus on growth opportunities, rather than pure survival”.
The new terms may also allow businesses to align their lending with projects with a longer-dated yield and return view (e.g. acquisitions or fit-outs).
The move to extend the loan tenors was first flagged by Banjo CEO Guy Callaghan in May, when he told The Adviser’s In Focus podcast that the lender was pushing out the maximum length of its working capital loans to give businesses “a longer period to repay the loans” and “cut down the actual repayment velocity” thereby alleviating the strain on cash flow and putting businesses into a position of strength.
Officially announcing the changes on Monday (22 July), Callaghan said: “Growth initiatives for SMEs seem to be pretty flat at the moment compared to when the economy is thriving. While there is support out there to help businesses survive, we want to be in a position to help them thrive.
"We’ve had feedback from SMEs who have a clear vision of their future growth but haven’t been able to find flexible financial solutions that allow them to achieve their goals.
“By offering extended repayment terms, we’re empowering forward-thinking businesses to plan and invest with confidence and pursue their growth strategies.
“Whether it’s scaling production to win new contracts or increasing operating expenses, these longer tenor loans offer businesses the breathing room they need for success.”
Brokers have welcomed the move, with Yuan Chong, senior broker at Sqale Finance, saying he expected to see more SMEs using Banjo products in their overall growth plans.
“A substantial and consistent buffer positions a business for continued growth because if the tenor is too short then it’s hard for businesses to establish and nurture opportunities,” he said.
The finance broker said that 80 per cent of his brokerage’s business clients had annual revenue of less than $3 million and typically seek “fast, low-doc loans over a maximum term”.
“[T]his revamp of Banjo’s product suite provides SMEs access to more affordable solutions in financing their growth,” Chong said.
The move follows Banjo recently boosting business loan capacity to up to $2 million per ABN and $5 million for a group of entities and the introduction of its new cash flow forecasting tool.
The SME lender also recently said that Loan activity from small businesses “had gone backwards”, with the number of loan applications falling and approvals plummeting in the last quarter of the financial year 2024.
The SME lender said that an SME’s “inability to service new loans” had been a key reason for the uptick in declined applications, as well as the persistence of SME debt with the Australian Taxation Office (ATO) and “adverse existing credit”.
You can find out more about Banjo’s extended product lines in The Adviser’s In Focus podcast with Guy Callaghan, here:
[Related: Banjo reports 86% rise in loan rejections YoY]
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