Like many small business owners, our client started her company with the help of family members. She was lent 35K to get her new hair salon off the ground. There with no set terms or time frames in place to repay the funds—just generous and supportive loved ones.
After operating for over a year, our client knew it was time to repay her family. Then COVID-19 happened and everything changed. While her shop remained open throughout the pandemic, business slowed down dramatically.
And while she began to navigate her ‘new normal’, our client’s goals shifted to boosting cash flow and getting ahead of COVID-19, in addition to paying off her start-up costs.
That’s when she turned to Valiant to find out more about her financing options, working closely with our Senior Working Capital Expert, Peter.
Peter took the time to understand her situation and find the right type of funding for her unique needs. After deciding on an unsecured business loan, Peter worked with both our client and her partner to secure funding with NAB, while they juggled the day-to-day running of their salon.
“Lenders can usually offer around 100% of a business’ monthly sales, so if you turnover around 35K a month, chances are you’ll be approved for 35K assuming there are no red flags or reasons otherwise to decline.”
Like many of the big banks, NAB required twelve month’s worth of transaction history, exported as CSV files within their portal. For most businesses, this means uploading not just one file, but several, which can quickly become tedious.
As a salon owner, our client makes lots of transactions in any given day, making this process even more complex. But Peter was able to do all the heavy lifting on our client’s behalf, spending hours on the phone to ensure the files were submitted successfully through NAB’s portal.
Unfortunately, the application fell through (twice) so Peter did some investigating. The second time round, an unexpected credit issue was found on the client’s account. Peter took a closer look at the full report to figure out what went wrong.
He found two things: firstly, the client had four different identities on file, and secondly, a utility default had been recorded. Peter discussed these issues with our client to better understand how he could work around them.
Once he had the information he needed, Peter turned to Get Capital, a leading non-bank lender.
“After looking at the client’s monthly turnover, I knew she had what it took to get the 35K requested. I simply needed to articulate her strength as a borrower in a way lenders would understand, so that they could see past the credit issues.”
But given the nature of unsecured lending, it’s generally harder to qualify for funds and COVID-19 added a whole new layer of complexity to the application process.
Peter wrote to Get Capital, explaining what had happened to our client previously with NAB. He also clearly expressed his view on the client as a good candidate for unsecured borrowing, despite potential red flags on paper.
Get Capital approved the full loan amount of 35K right away, and the funds were settled within one week of the client’s initial enquiry with Valiant.
The takeaway? Lending is not black and white. No two businesses are the same—in fact, we discover something new everyday in the SME space.
But stringent approval criteria—especially from bigger banks—and traditional application processes don’t cater to the vastness of SMEs we see, or consider those who mightn’t fit the profile of a traditional ‘ideal’ borrower.
“Communication between all involved is key in these situations, and taking the time to understand why something has been declined, or why something is missing,” says Peter.
“It’s not black and white, and that’s why non-bank and alternative lenders can work so well for businesses like these.”
Peter is a Working Capital Specialist here at Valiant. He's passionate about helping businesses with unique needs find alternative solutions that align with their goals.