Currently, the world is experiencing a Black Swan event. Characterised by their extreme rarity, their severe impact, and the widespread insistence by some that they were obvious in hindsight,  Black Swans appear to have one increasingly predictable characteristic: they have multinational if not global impact.

We know that Australia has so far coped well with the coronavirus Black Swan, thanks to a large dose of good management and a dash of good luck. The level of legislative change, formation of new government policy and mobilisation of the bank and non-bank sectors has been truly remarkable and extremely well-targeted. Without the government and finance industry support, many companies would have had no option other than to file for voluntary administration.

At Banjo, in the space of a little over 8 weeks we have encountered heartbreaking stories of clients experiencing decreases of 50-100% in revenue and suffering emotional and financial distress.  

At the same time, not one of these clients has been paralysed by fear or stuck their head in the sand. Small business owners in general are resilient and care about their staff. Pretty much every client we have spoken to cannot wait to relaunch their businesses when Stage 3 restrictions are lifted, and many are using this time to explore a number of business options.

First among these is the business strategy. We advise our clients to go over their business plans to find ways to: either refine and focus the current offering, or pivot into new business opportunities; negotiate supplier terms on a case by case basis; improve debtor collection; run down existing inventory levels; reduce expenses; launch online portals to generate sales; negotiate rent relief with landlords and close stores; and in general get “lean and mean”. 

As restrictions begin to ease, we’ll hopefully move from a black swan event to a phoenix event, as businesses rise with renewed vigour to thrive through another cycle. SMEs across Australia will be seeking the funding needed to rebuild inventory levels, hire staff, and spend on new equipment and marketing campaigns to rebuild their revenues back up to historical levels.

Finally, we’ve heard often in recent times to “never waste a crisis”. As a lender, we believe that means encouraging clients, even in the good times, to always be preparing for the unknowable, and thinking about modes of recovery.

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^ This calculator provides an indication of typical average fixed fee (or interest expense) costs and repayments for working capital loans (but not other types of loans such as Banjo Express or Asset Finance). The actual fixed fee (or interest expense) and repayments will vary based on your individual circumstances. Fees and terms and conditions apply (including an origination fee on each advance of 1.5% for 6 months, 2.25% for 12 months, 2.5% for 18 months, 2.75% for 24 months or 3.00% for 36 months). The repayments set out above are inclusive of fixed fee (or interest expense). Fixed fee (or interest expense) accrues upfront and is paid in instalments.