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SME lender launches mortgage for business owners

ScotPac has soft-launched its first home loan offering and two property-secured products for Australian business owners.

25 November 2021

The asset and debtor finance lender has entered the home loan market for the first time, after launching a new mortgage product for SMEs and two additional property-secured cash flow products.

ScotPac’s Home Loan for Business Owners enables small and medium-sized business owners to purchase or refinance a home up to $2 million in value. Terms for the mortgage product range from five to 30 years.

Businesses must have held an Australian Business Number (ABN) for at least 12 months to qualify for the mortgage, which can be used for purchase or refinancing.

ScotPac chief executive Jon Sutton commented: “Our new home loan for business owners will assist the hundreds of thousands of self-employed entrepreneurs who struggle to get home loans from traditional finance sources.

“The business owner then has the option, as their business evolves, to use their residential security for their future business lending with ScotPac, to quickly fuel business growth.”

As well as the home loan, ScotPac has also released a new property-secured Business Loan allowing an SME owner to unlock equity in their property to fuel business growth or to refinance from other business loans.

Similarly, its property-secured Business Cash on Call line of credit aims to provide working capital solutions to SMEs that may need to “smooth out cash flow and cover unplanned investments and expenses”. The non-bank said this product was “designed to compete with the more traditional bank overdraft” by giving the SME client the ability to draw funds if and when the business needs it (and only paying for what is used).

"This allows a business to manage day-to-day expenses to improve their cash flow and to quickly access funds to manage extra expenses as they occur,” Mr Sutton commented.

Both the business loan and the line of credit come with terms of between one and 30 years and offer either principal and interest or interest-only repayments up to five years. The business loan also comes with options to redraw or make extra payments.

All three products provide access to $20,000 to $2 million per property or up to $4 million for multiple properties.

They are initially only available through the broker channel, however, ScotPac said it had plans to expand into the direct channel next year.

Speaking of the new property-secured product line, ScotPac CEO Mr Sutton said it had launched the products after broker and client feedback had suggested there was a “yawning gap of underserved SMEs that actually want to use their home as part of collateral to expand their businesses”.

He pointed to ScotPac research that found business owners face challenges when securing a home loan or qualifying for bank funding for their business.

“In Australia alone, there are 350,000 self-employed business owners who face challenges securing a loan to buy or refinance residential property,” Mr Sutton said.

As such, he stated that many small-business owners “cross-pollinate between their personal and their business life” to access finance, but that ScotPac would be able to help SMEs access both mortgage and business loan products in one place.

The new product launch follows on from the business lender’s recent launch of its SME Bounce Back Fund, which enables businesses to access up to $1 million capital for a minimum term of 12 months, with the first three months interest-free.

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