Fifty years ago the great Aussie achievement was to own a home in the lucky country. Now many younger business owners are waking up from the property dream and leveraging their business acumen instead.  

For the newer generations, property in Australia is not the must-have it once was. In 1971, 64% of 30-34 year olds in Australia were home owners, but by 2021 this had fallen to 50%. There’s been a similar drop for the 25-29 year old age group – 50% home ownership in 1971, plunging to 36% in 20211. Much higher property prices, finding a life partner or having children later or not at all, and smaller household sizes are likely to be among the contributing factors.

Fortunately, this hasn’t deterred entrepreneurial Australians from starting and growing businesses. In December 2020 alone, there were 2,830,764 registered companies.

Yet the Australian major lenders continue to be focused on securing loans against property, despite the declining interest in it among the under-40s. This leaves a growing number of young, switched-on, successful entrepreneurs who don’t own property or securable assets getting stymied when they want to source funding.     

According to Banjo’s Business Development Manager, Frances (Frankie) Rickard-Bell, there are more enlightened lenders who believe that not owning property is not a problem. 

“For many SMEs, owning property is often not as important as the business’ assets. Profits, creditors, stock, equipment and inventory can all be leveraged with the right lender to get the funding to power a business,” Frankie explains.

“Currently 40% of Banjo clients with working capital and asset finance loans don’t own property.”

“For example, one of my clients is a company run by two young entrepreneurs – a financier and a chef - that manufactures a range of ready meals for the fitness and health- conscious consumer. Their business is hugely successful, and to keep up with demand they recently needed to borrow $1.5 million. They had been putting all their profits back into building the business, and consequently didn’t own any property assets to secure against the loan.” 

“We could see their business was profitable, the owners had a strong track record and a good balance sheet. As a result, we funded their working capital loan, based on their business assets.” 

In other circumstances, getting the right amount of funding as soon as it’s needed, eclipses cheaper funding that an SME has to wait around for. 

“I recently worked with a broker whose client manufactured electric scooters. A container load of parts had shipped earlier than expected and was waiting for them at the docks. The client didn’t have the $250,000 to get it off the dock at that point, and it was costing $10,000 a day to leave it there. Again, they didn’t own property,” Frankie says. 

“The client couldn’t sit around waiting for lengthy processing and approval times. In a case like this, time is literally money, and the only solution is a fast solution. 

 Banjo’s approach is to make decisions quickly and responsibly, using technology to source the right data, and the credit assessors speaking directly with the business owners. Within 48 hours we had provided their working capital loan.” 

Research repeatedly shows that SMEs find it difficult to get unsecured funding, especially for the amounts they need in today’s business environment. Traditional banks may approve some unsecured loans, but they’ll typically be for a much lower amount than the business has asked for. 

Frankie recalls another recent client, a 29-year-old man with a solar panel installation business, who did own property, but like many SME owners, didn’t want to use it as security for a loan. He needed to borrow $1 million and had been offered only $500,000 by a major bank. Banjo provided $1 million unsecured funding, enabling him to achieve the growth goals he was aiming for. 

“There would have been an opportunity cost to this SME owner of accepting the smaller loan. Instead he was able to use the full amount of funding delivered straight away, to make a 40% margin that took his business to the next level.” 

SMEs in manufacturing, wholesale, online retail (especially wellness and alternative products), and hospitality often find themselves unable to fit the criteria of the major banks, who view them through a narrow property lens. These and other established, property-less SMEs who are relatively early in their lifecycle are no impediment to a more open-minded lender, who can help you find the right solution.   

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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.