Small business lender ScottPac is dipping its toes in the home loan market with a new offering aiming to provide small business owners and sole traders with better access to finance.
ScottPac will offer three new products that take property security from early 2022. ScotPac CEO Jon Sutton said this initiative will address a yawning gap in the market and will build upon the lender’s existing services such as debtor, asset and trade finance.
“Over the last 12 months, we have done an incredible amount of market research. What we have discovered in talking to brokers is there is a yawning gap of underserved SMEs that want to use their home as part of collateral to expand their businesses,” said Sutton.
“ScotPac is willing to take on and service this neglected part of the market, and through our deep understanding of SME businesses and their cashflows we can provide additional funds and products for their home loan and business needs,” Sutton said.
“All three new solutions have fast set up, no-fuss paperwork and conditional approval in as little as 48 hours, plus personalised service from a dedicated relationship manager who can help SME owners with funding as their businesses evolve.
Sutton said unlike the cookie-cutter approvals approach of other lenders, ScotPac will be able to personalise solutions to remove many challenges business owners face, allowing them to say yes to more loans.
Approved borrowers can access from $20,000 to $2 million per property, or up to $4 million for multiple properties. Terms vary from five to 30 years for the home loan and one to 30 years for the business loan and credit on-call products.
Home loan for business owners
ScotPac’s move to offer a home loan for business owners marks the first time a non-ban small business specialist lender has made the offering. ScotPac’s Home Loan for Business Owners will offer property-secured lending allowing business owners to use equity in their home to help fund their business, with bundled savings if they use additional ScotPac solutions such as invoice, asset or trade finance.
Sutton predicts sole traders will be the first to benefit from the new offering. He says the new home loan for business owners will assist the hundreds of thousands of self-employed entrepreneurs who struggle to get access to traditional finance.
“In Australia alone there are 350,000 self-employed business owners who face challenges securing a loan to buy or refinance residential property,” Sutton said.
“Our SME Growth Index research shows us most SME owners look to lean on equity in their home as a source of business funding. So, we’ve introduced a flexible solution where owners can use the extra equity in their residential property to borrow for their business.”
“The business owner then has the option, as their business evolves, to use their residential security for their future business lending with ScotPac, to quickly fuel business growth.”
The Home Loan for Business Owners is amongst a suite of products that also includes a property-secured business loan and a cash-on-call product that will allow the lender to compete with a traditional banks’ overdraft.
“Business owners need fast funding to fuel their investment and growth, and our new loan products answer this need,” Sutton said.
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