Australian financial technology company and alternative lender, Lumi, has announced it has completed an $8 million capital raise in a bid to turbocharge business growth and meet the rising demands of small business lending in Australia.
The raise was led by a consortium of on-shore family offices and was led and managed by the Josh Liberman Investment Group.
Lumi is quickly reaching its goal of becoming one of the country’s leading alternate lenders, especially as it taps into a post-Hayne Royal Commission industry that is ripe for change.
It focuses on providing small to medium-sized enterprises (SMEs) a faster, easier way to access working and growing capital.
What does this cash infusion mean for Lumi?
Lumi Founder and CEO Yanir Yakutiel said its bolstered financial runway would allow Lumi to both scale up its origination volumes and further invest in its technology, and to bring more options to the table for Australian small businesses by providing fast, flexible and fully transparent loans that major providers such as banks cannot supply.
“We’re seeing small businesses within different sectors all over Australia growing quickly, and we are growing with them to meet their desire to build and scale their businesses,” Mr Yakutiel said. “We are also looking at doubling our team over the next 12 months to keep up with demand.”
Despite the big four banks currently dominating the lending market, Mr. Yakutiel sees a growing niche for Lumi in the alternative lending market – especially for small businesses.
“Post Hayne, the major banks are retreating even faster from small scale commercial lending. They don’t have the technology or the agility to originate and service small loans,” he said.
“Our aim is to become the go-to, lender of choice for SMEs. When the big banks say no, which they often do, we find a way to say yes, because we’re on the side of small business. The Hayne Royal Commission has shed plenty of light on predatory banking practices towards SMEs, and a complacent disregard for customer satisfaction amongst the big four banks.
How is Lumi looking to help SMEs?
“We are looking to not only make capital more available to SMEs, but to ultimately revolutionise the user experience in financial services through our dedication to transparency and customer support,” said Mr Yakutiel.
“Considering the findings of the Royal Commission, in some cases this is a very low bar for us to jump over, given the conduct of our much larger competition.
“We understand small businesses. Running a small business is tough, and Lumi makes it just a little easier to secure the financial runway that these hardworking individuals need to realise their dreams. We understand that ours is an industry that has suffered immense reputational damage at the hands of the banks.
“That’s why we are a signatory and proud supporter of AFIA’s Online Small Business Code of Lending Practice, as we want to give our customers peace of mind, and the reassurance that there is an independent Code Compliance Committee overseeing what we do and acting in their interest,” he said.
“If the banks say no, where do these business owners go? The answer is increasingly Lumi because we give them optionality when the doors are closed.
“We lend to both blue collar and white collar businesses from plumbers, bakers, sparkies and tradies to lawyers, architects and accountants. We look at all industries differently, and unlike the banks, we’re of the strong view that not one size fits all.”
What challenges lie ahead?
Lumi sees the two fundamental challenges in the fintech alternative lending sector: access to capital and speed & predictability of outcome.
“We built the Lumi lending platform to ensure loan applications are seamless, fast and secure and we are now able to extract the diamonds in the rough from the businesses that banks often overlook with our comprehensive credit decisioning algorithm,” Mr Yakutiel said.
The Lumi lending platform combines API accessibility with rich data sources informing its credit decisioning to look at the history of an applicant and determine their ability to service a loan, with approval in less than an hour.
New applicants can get unsecured business loans from as little as $5000, provided they have a valid ABN, a gross annual turnover for the business of at least $50,000, and a minimum of six months in operation.
The platform allows interested borrowers to access up to $100,000 for a single loan on flexible terms without the hassle of lengthy applications or paperwork.
“For too long, the small businesses of this country have been left with next to no optionality for funding and for that reason, have often been neglected, ignored or held over a barrel on terms,” he continued.
“With the rise of alternative and more nimble lenders like Lumi, that power balance is shifting and that’s a good thing for business operators and the economy.”