One SME lender, which launched in March last year, is set to get its banking licence this week.
Judo Capital expects to become an authorised deposit taking institution (ADI) later this week.
The SME lender, which launched about a year ago, said that these plans were in the works from day one.
“We believe that — notwithstanding the higher regulatory cost associated with being a bank — there a lot of other benefits that allow you to grow and offer businesses a greater range of options than we would be able to offer if we were a non-bank lender,” CEO Joseph Healy told sister title Mortgage Business this week.
While the move will enable Judo to expand its offerings, Mr Healy said that the bank will “only lend to small and medium-sized businesses”, which is its current market strategy.
Mr Healy believes SMEs feel the banks are not catering to their unique set of circumstances.
He notes a “one-size-fits-all proposition” that is “largely predicated on the availability of real estate security”.
“What the industry has done in Australia [is] it essentially says to an SME: ‘How much is your home worth?’ or ‘How much real estate security can you offer?’ [Their] lending policy says you can do 60 or 70 or 75 per cent, and that means that a lot of small businesses do not get access to the credit that they deserve,” he said.
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