24 November 2015
6 min read
Blood, Sweat and Tears
You are no longer the start-up business owner with a dream and passion. After 3 or more years of hard work, persistence and some anxious nights – your business is established and you may even be drawing wages.
Remember when you approached the bank for financing at the start and the answer was: ‘too early for us’ or the Bank Manager asked you to provide your home as security or possibly suggested you fund your business with an expensive business credit card?
It is just so perplexing when today an enthusiastic Business Development Manager of the same bank has become aware of your business success and wishes to proactively market their services to you.
He says “If you could provide me with a business plan telling me your story; how your business works; and bring a 12 month cash flow forecast and copies of the last 3 years historical financial statements….we could have a really good conversation.”
And you are thinking that you funded the business from savings and family loans, toiled into the wee hours and weekends, sacrificed family holidays to build the business. It has been substantially de risked. And your bank is now stating they would consider a square shaped loan if you have some square shaped box full of the required information. Well, whilst you could do with a cash injection to kick-start a new campaign, you just do not have the time to compile the information required and quite frankly you have more pressing priorities; like generating income today.
Here are two real life examples that establish the needs of small business when it comes to growth: convenience, speed and access to finance.
Case Study 1* – the hybrid ‘bricks & mortar’ and online retailer
Grace runs an established gift and home wares retailer with sales approaching $1m per annum. Lately, her revenues have been growing due to the ever expanding suburban population and increased foot traffic in the main street shopping strip. And online sales have steadily grown over the last 3 years without any advertising. Grace and 3 full time staff are very busy, and her mother works two days a week part time to help as well. After she closes the shop and completes some daily administrative tasks, she gets home well after 6pm to take care of her two children. She gets some breathing space after 9pm when the kids are in bed. Grace knows that hiring a book keeper 1 day a month will help – a small marketing budget could increase online sales – and the shop next door is available for lease which would give her more space to meet customer demand especially as Christmas approaches.
All of this will require a $65,000 investment, and she will need to finance it. The Bank across the road closes at 4.30pm, and she finds it difficult leaving the shop during the day to visit a banker. One night she goes online to search for options and finds the website of a marketplace lender called Banjo. The online application takes less than 10 minutes and it is easy to complete due to drivers license identification and the download of financial records from her cloud based accounting software (MYOB). She is asked a time when the lender can call, and a time is arranged for 8.30am as she is driving to open the shop. After some general discussion about the business, the loan is approved and the funds are deposited into the nominated business cheque account the next day. No documents required, no paperwork: all completed online with a brief telephone conversation. Grace’s priority was funding the expansion to make the most of the Christmas retail season and she was able to achieve this with fast funding. Banjo served her needs at rates equivalent to a traditional financier and the Bank didn’t even get a look in.
Case Study 2* – the regional commercial property estate agent
Eddie runs a commercial property firm with a large customer base for both small businesses and mid-sized corporates for a region of Victoria. The firm is well known and valued for their ‘straight up’ approach. Lately he has been so busy that he has 4-5 day pre-set schedules with no room for ad hoc meetings.
Despite a strong and regular rent roll, commercial real estate sales can fluctuate, and Eddie knows he has a looming cash flow shortage with GST and Superannuation payments due at the end of the quarter. He knows these will easily be covered in March with some excellent property sale listings.
Eddie approaches a local bank but the analyst viewed the funding of statutory payments as a sign of a distressed business. Eddie was not willing to pledge his family home as collateral, and decided not to proceed with the loan application. Five pages of application forms and a 3-week waiting period were just not worth his time.
On a Sunday watching his son play football from the comfort of his car, he went online searching for small business loans and found Banjo. The application was completed in 10 minutes, he downloaded his Xero accounting information and he received an approval Monday morning. The funds were deposited to the business cheque account that day.
The Bank believed Eddy was a less credit worthy customer. Banjo reviewed all available data in real time to obtain a holistic view of the business and made a different decision.
There are many such case studies: busy business owners that are passionate about their trade and customers; there are many service businesses owned by young people that may not have purchased a home; there are opportunity hunters that know you must act quickly to capitalise on a growth option.
Banjo uses a myriad of available financial data to obtain a holistic view of the business in real time. We provide a unique user-friendly online customer experience: not a bricks and mortar destination separated from reality by a moat of rigid rules.
Sounds just brilliant to me.
* These case studies are taken from real Banjo customer experiences