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Turned away by the Big Four? How to access the emerging SMB lending market

The pandemic made it harder for small businesses to access traditional bank loans. As we come out of Covid-19, SMB Media sat down with Frank Versace from small business lender Judo Bank to shed some light on the future of SMB lending. As the small business-friendly banks’ Chief Relationship Officer, Frank reinforced the importance of reviving personalised bank-to-business relationships, especially during these tough times and beyond. 

 What qualities make small business customers unique from a lending perspective?

Small businesses, by nature, come in all sorts of shapes and sizes and everyone has a unique story to tell. They also could be any type of business, in any industry or location in any geography. This requires a lender to take the time to understand all the elements which make each business great, to truly understand the people behind them and their motivations, and to ensure that each lending is tailored to the individual needs of that business and to ensure that each lending decision is tailored to the individual needs of that business.

What kinds of challenges do small businesses face when accessing finance from large banks?

Most major bank lenders take a highly commoditised approach to their lending assessment and rarely look to understand the individual needs of each business. Most business owners are only able to access vital funding to the extent that they are able to provide bricks and mortar security which ignores the considerable balance sheet strength many businesses possess. In addition, the lack of trained and empowered bankers often means that accessing finance can take months whereas business opportunities often necessitate a much more dynamic response. 

What was missing in the market for small business lending and how did Judo fill that gap?

Judo Bank believes that, for small and medium businesses, the ‘craft’ of lending has been lost. In the rush to find efficiencies many major banks have moved into automated or algorithmic lending which takes much less account of a business owner’s character, track record and business acumen. Judo Bank was built to bring a distinct relationship lens back to the businesses that rely on the support of a lender to achieve their business objectives.

How has the pandemic changed the small business lending market?

The whole market has changed through the pandemic but, of all the sectors, small business has potentially been impacted the most by the rolling lockdowns we have witnessed over the last 12 months. Many small businesses have not been operating long enough to create sufficient cash reserves and the loss of experienced staff, particularly in hospitality and retail through temporary and/or overseas labour, has been difficult to absorb. There have been numerous other short term and long impacts which make historical perspectives less reliable in determining a business’s future prospects. This reiterates the importance of having a genuine banking partner rather than one reliant on rigid policies and a one ‘size fits all’ approach to lending. 

How has the lending market met (or not met) the unique needs of small businesses during the pandemic?


The suite of products has not changed that much through the pandemic. Most businesses would still need one or two of a core set of lending products e.g. a business loan, working capital facility or equipment finance line. What has changed is the government’s willingness to support the banks to ensure they continue to lend to the businesses that need it. Business owners need a commercial and customer orientated banker who will take the time to understand the needs of their customers during this highly unusual time, and recognise the important role banks have to play in supporting small business as the backbone of the Australian economy.

As we come out of Covid-19, what does the future of small business lending look like?

The ongoing impact of the pandemic continues to be a feature in the decision making of many small business owners. However, the early part of 2021 has demonstrated how resilient the Australian economy is and we can rightly look forward with optimism. This means that businesses will be looking for finance to grow rather than simply survive. Crises such as Covid invariably create long term structural changes to the economy and many businesses need to evolve their business models to take account of these. Judo’s philosophy on the future of small business lending centres around the need to harmonise the best of modern technology with human judgement and relationships. 

Frank Versace, Chief Relationship Officer, Judo Bank


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