Helping SMEs access funding

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A new partnership between bookkeeping and software solutions company MYOB and US-based small business loan provider OnDeck will assist SMEs access finance to grow their business.

According to James Scollay, MYOB’s general manager of SME solutions, the partnership came about after MYOB started investigating ways it could help solve one of the key pain points for SMEs – cash flow.

“Last year, cash flow was the number one pain point for small businesses in Australia,” Scollay highlights.

“So as we move customers to the cloud, we’ve been looking for opportunities to solve that in a more innovative way. We had a look at what was going on around the world and we found OnDeck, who are doing some really innovative thing, have a great customer service track record and made a great partner for us.”

OnDeck started in 2008 in the US, where it has delivered more than $4 billion in funding to small businesses across hundreds of industries. OnDeck launched in Australia in November last year – the first country it has established operations in outside of North America.

Cameron Poolman, OnDeck Australia chief executive, says the company is proud to have entered into the relationship with MYOB.

“We’ve got a shared vision of helping out small businesses,” he says. “And [MYOB] also has 1.2 million small business customers.”

Scollay says from a MYOB customer point of view, it is a straightforward collaboration.

“We look at our customers in the cloud, we can apply the OnDeck algorithm and work out which customers are pre-approved for finance, let them know they’re pre-approved and that pre-approval’s ready for them when they need the funds. Then they go straight to OnDeck who takes it from there.”

In Australia, OnDeck provides loans between $10,000 and $150,000 on six-month terms.

Poolman says the application process is much easier for SMEs than applying through the banks.

“At the moment they’ve got to wander down to their bank branch, speak to the bank manager, hand over a lot of forms and that whole process can take five to six weeks to learn whether you’re going to get the loan or not,” he says.

“With OnDeck, you go online, the decision can almost be instantaneous, and funding the next day. So small businesses are able to use this money to grow their business – they’re buying inventory, they’re doing marketing, or they’re even using the cash to cover off some extra employees over a busy time.”

The company also recently signed an agreement with CBA.

“They made a decision that they don’t have a product for [smaller business borrowers],” explains Poolman. “These are unsecured loans, they’re small and they’re short-term and it better suits our model than the banks.”

So what kinds of trends are occurring in the SME lending space?

Scollay highlights MYOB is seeing three trends around what small businesses want to borrow money for.

“The first one is more stock, the second is hiring new staff, and the third one is marketing – so really good growth opportunities,” Scollay says. “The other trend we’re seeing is that small businesses are increasingly willing and wanting to look at new finance options like OnDeck.”

And it’s not just small businesses set to benefit, but also the economy. Research conducted by OnDeck showed that the first $3 billion lent in the US generated more than 74,000 jobs.

Poolman believes the SME sector in Australia is healthy, albeit notes the difficulties they face in accessing certain types of funding. But that is set to change. 

“If an opportunity arises it just takes too long through the bank, so through us they can advantage of that opportunity and buy that inventory or do the marketing that they couldn’t do.”

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