CommBank Refocuses Cash Flow Backed Business Lending Efforts
(25 May 2022 – Australia) Lenders must work harder to finance small businesses backed by cash flows as opposed to securing against property states CommBank Head of Business Banking, Mike Vacy-Lyle.
CBA is rapidly expanding its use of technology to extend credit based on small business owners’ working capital cycles, moving away from a traditional dominant reliance on businesses putting up the family home as collateral to secure business funding. Small business confidence remained high approaching the federal election however there was significant uncertainty over inflation, leading to expectations that confidence would soften in Q3 2022.
With up to 18 percent lending market share and over one fifth share of the transaction market, CBA is focused on lending more into those relationships throughout the next year. The bank is looking to sectors where it dominates in technology to grow in small business, with the expectation its new point of sale technology will help it acquire customers in the lucrative healthcare space.
“The lazy way of banking is to go and ask, ‘Do you have a property?’ then value it. Banking is when you say, ‘Tell me about your working capital cycle’, and you have really liquid collateral” Mr Vacy-Lyle commented.
“The issue now is trying to figure out where consumer demand for goods is and what is the ability for business to pass on cost increases. We’ve seen more than half have been able to pass costs on” Vacy-Lyle added.
Subscribe