How alternative lending supports small businesses into the new normal


Every Australian small and medium business has been impacted by the pandemic, and many experienced significant setbacks. Whether their sales and operations were curbed by lockdowns, or they had to quickly invest in new tech to enable remote working or trade online, this inevitably put pressure on their finances. In the first half of 2021, around 77% of SMEs reported a reduction in cash flow.


Businesses have needed to adapt and change, and these changes will outlast the pandemic. Some industries, like property and construction, saw a surge in momentum. But business owners keen to invest in new growth opportunities also faced tighter lending restrictions among the major banks – limiting their access to much-needed capital.

Despite historically low interest rates, lending activity to small and medium businesses remained stagnant throughout the pandemic. Bank approvals are subject to serviceability, which in turn means meeting cash flow and profitability criteria. And this is clearly affecting small businesses – with one in five reporting that a lack of finance is hindering their operations.

COVID triggered fluctuations in a range of sectors, leading many business balance sheets and forecasts to fail traditional servicing calculators,” Jason Lucas, National Sales Manager with Assetline Capital

He says some sectors also carried a perceived “stigma” of unpredictability during this period. However, alternative lenders like Assetline Capital have always taken a different view. And Assetline Capital never stopped supporting and lending to small business owners throughout 2020 and 2021.

We are able to take a commercial view of the transaction as a whole. We look at what the borrower is trying to achieve – the business strategy – as well as the underlying security including valuation and exit strategy. So cash flow is less relevant. And because we have an in house valuation and credit risk team, we can make those assessments very quickly.” says Lucas

While some banks finance turnarounds lagged last year, Assetline Capital was able to move quickly, and provide approvals and settlements within days. And that made a big difference to business owners under pressure.

Bridging a short-term gap

Bridging loans are a fairly common requirement for business owners looking to purchase a new property, and need quick approval through to settlement. For example, to expand operations into a second owned premise, they could use the equity in their existing property portfolio to fund the settlement. Once the purchase is complete, they can then choose to consolidate their assets to pay off the bridging loan, or refinance to a major bank.

Developers also typically have various sites in different stages of completion at any one time. They may want to leverage their property portfolio to release equity to complete some projects, or purchase a new block of land, and repay the bridging loan once they’re ready to sell.

Effectively, a bridging loan buys you time. And with an asset-based ethos, Assetline Capital can ensure funds are settled on time – and help those business borrowers avoid penalty payments or potentially miss out on the ideal location.

From cash flow funding to time-critical deals

Assetline Capital has become a go-to lender for business owners throughout the pandemic and beyond. As property values continued to grow, this in turn enabled borrowers to tap into their property portfolio to fund cash flow, or purchase equipment or services at favourable terms, or commit to a major acquisition in investment.

For construction businesses and developers, significant building material shortages or price hikes of 20% or more meant many needed additional funds to keep projects going,” says Lucas

“Logistics companies were able to use their properties as security for commercial vehicle loans, to expand their fleet and meet the surging demand for online delivery. And of course, for many other types of businesses, it was simply a case of making sure they could keep paying staff and rent while their businesses were in limbo during lockdowns.”

Assetline Capital can offer property-backed cash flow loans for terms of up to 24 months – enough time to see your business strategy through. “It’s ideal for any business that has a few residential or commercial property assets, and a commercial requirement for access to funds,” notes Lucas.

Is it time to re-think your lender?

Business owners have traditionally turned to their incumbent lender when they need more capital, with banks issuing more than 90% of outstanding small and medium business debt in 2018-19. But today, there are many more options available. And those alternative lenders are filing an important gap, given the major banks’ appetite for riskier SME loans keeps shrinking.

“Major banks are no longer the primary source of funding for small business. They’re more selective, choosing to focus only on clients that meet their requirements,” notes Lucas. “Non-bank lending funders like Assetline Capital have become the new normal as a first point of contact for both borrowers and their brokers,” he adds.

And it’s not really surprising. Having the support of a lender that provides confidence, flexibility and speed may be the difference that keep a business going. Brokers also say a more responsive model – where they can actually talk to the decision-maker – means they have more certainty a lender like Assetline Capital will deliver on the promises they make to their clients.

We really do understand the needs of Australian small and medium businesses – because we are one ourselves,” says Lucas

“But we’ve also built up a well-established capital structure and a strong balance sheet over the past 10 years. So we can keep lending in a volatile and unpredictable market – we’re not dependent on other sources of funding to make settlement happen.”

For busy Australian businesses that want to get things done, alternative lenders like Assetline Capital can make all the difference.

If you’d like to keep your business moving forward, please get in touch.

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