Debtor and asset finance lender ScotPac has made its first move into property-secured lending, with three new products for business owners:
- A residential home loan
- A property-secured business loan
- A property-secured line of credit
All three products provide access to $20,000 to $2 million per property, or up to $4 million for multiple properties. They can reportedly reach conditional approval in 48 hours.
The products target SME business owners and enable them to purchase residential properties of up to $2 million and also use the equity in their homes to continue to finance their businesses.
They are currently being soft-launched through the broker channel, with the expectation of launching directly to market next year.
The ScotPac Home Loan for Business Owners is available for residential properties up to $2 million on five-year to 30-year terms. While ScotPac had not released the starting rates for this product at the time of writing, it has said that rates will be risk-based and “competitive”.
The mortgage is not for commercial property “at this stage”, according to ScotPac chief executive Jon Sutton.
“It’s something that we might look at in the future, but we don’t have a plan to do anything in that space in the short term. But it is always something that we would look at over time,” he told Mortgage Business.
Business loans and ‘Cash on call’
Meanwhile, two property-backed working capital products have also now been soft-launched.
The property-backed ScotPac Business Loan and ScotPac Business Cash on Call products are both available on one-year to 30-year terms and enable an SME owner to unlock equity in their property to fuel business growth, or to refinance from other business loans.
They offer principal and interest repayments, or interest-only repayments up to five years, with options to redraw or make extra payments.
“Business owners need fast funding to fuel their investment and growth, and our new [business] loan product answers this need. As each business evolves ScotPac’s breadth of solutions can meet their changing needs, with a focus on fast set-up and tailored solutions for each business,” Mr Sutton said.
Speaking of the Cash on Call product, he added: “We will offer a set limit and the ability to draw funds if, and when, the business needs it, only paying for what is used. This will suit business owners looking for a solution similar to an overdraft.
“This allows a business to manage day-to-day expenses to improve their cashflow and to quickly access funds to manage extra expenses as they occur.
“It is competitively priced within our target market because the credit on call is secured by property and it allows a business owner to benefit from ScotPac’s 30-plus years of knowledge, and track record of delivering the quick answers, flexibility and fast funding that business owners require.”
The products can also be bundled with ScotPac’s existing asset, trade and debtor finance offerings, resulting in discounts, the CEO added.
Servicing the 'neglected part of the market'
Speaking of the new property-secured product line overall, ScotPac CEO Mr Sutton said that the lender had created the new products off the back of broker and customer demand.
He said: “In Australia alone there are 350,000 self-employed business owners who face challenges securing a loan to buy or refinance residential property.
“Our SME Growth Index research shows us most SME owners look to lean on equity in their home as a source of business funding. So, we’ve introduced a flexible solution where owners can use the extra equity in their residential property to borrow for their business.
“ScotPac is willing to take on and service this neglected part of the market, and through our deep understanding of SME businesses and their cashflows we can provide additional funds and products for their home loan and business needs.
“Brokers and their clients will appreciate all three new solutions have fast set up, no-fuss paperwork and conditional approval in as little as 48 hours, plus access to a dedicated relationship manager who can help with funding solutions as a [business] evolves.
“Unlike the cookie-cutter approvals approach of other lenders, ScotPac has the ability to personalise solutions to remove many challenges business owners face, allowing us to say yes to more often than other lenders.”
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.