Grow Finance to introduce asset-based lending for SMEs

New managing partner leads innovative product offer

Grow Finance to introduce asset-based lending for SMEs

Grow Finance has appointed a highly experienced industry innovator to its strategic leadership team to help it achieve the aim of being the non-bank for small business.

Andrew Speers (pictured) has joined Grow Finance’s strategic leadership team as managing partner of structured finance and payments. He will be launching new client lending solutions, such as asset-based lending, enabling SMEs to access cashflow “trapped” in trade receivables and inventory.

Speers has more than 20 years of experience working in banking and finance roles in Australia and overseas, ranging from product development to innovation, operations and running sales and distribution teams. He has worked at CBA, the Royal Bank of Scotland and HSBC.

Speaking to MPA, Speers said he had a very good understanding of how banking and finance worked in different markets.

“I think that’s a real benefit in what Grow Finance wants me to do in my role as the managing partner of structured finance and payments,” Speers said.

“It’s bringing best practice from around the world into the Australian small business community and setting up the next generation of products to help Grow maintain that incredible trajectory that it’s had recently with being named the AFR fastest growing company.”

Speers said the key to that was making sure the lender had the right products and services to fulfil the needs of its customers and this was the reason he had come on board.

He said he was attracted to the role because he wanted to work with visionary Grow Finance co-CEOs David Verschoor and Greg Woszczalski and learn from them.

“They’ve done an incredible job in a very short period of time. They have a very clear vision around wanting to be the non-bank for business and creating a diversified set of products and financial services to Australian small businesses – that’s the lifeblood of Australia,” Speers said.

Australia was a small business economy and Speers said he was passionate about wanting to help that community access working capital.

“We want to help businesses fund their business assets and use their business assets security,” he said.

Read more: Commercial and asset finance lending posts record volumes

Speers explained his new role by referring to small business customers that had sought Grow Finance’s help recently.

“We’ve had customers come to us a lot asking how they can manage their working capital – supply chains are shifting, cost of goods are rising, so how do we make sure that we’ve got enough in our warehouses to manage our working capital,” he said.

Speers said asset-based lending involved sizing and securing loans against inventory in the warehouse or trade receivables – the assets could also include plant and equipment and commercial real estate. One recent example was a supplier of medical equipment, such as RATs tests and face masks.

“That inventory and that trade credit sale on terms is a use of cash within your business, so let’s find a way to give you some liquidity against those assets because that inventory is going to turn into an invoice, that invoice is going to turn into a cash receipt,” he added. “So that’s a pretty good source of security.”

Grow Finance would then determine the customer’s inventory and how much it was willing to lend against that and lend against the trade receivable.

“We ask our customers every seven days, every 30 days, just to tell us how much inventory and trade receivables you have,” he said. “We reset the amount of borrowing based on how much they’ve got in their warehouse, how much they’ve recently sold and we give them available cash flow.”

Speers said it was like a floating overdraft secured against inventory and receivables and it was very flexible because it helps a business “move up and down”.

“If they need to go and buy more stock because they can only get a shipment once a quarter instead of once a month because of supply chain disruptions, we can help them do that,” Speers added.

Read more: Government extends SME loan scheme

Asset-banking lending was a foundational product in the US, an emerging product in the UK and Europe and Grow Finance was in the process of launching the product in Australia soon.

Australian banks had been pretty lazy, said Speers, by typically providing SMEs funding secured against the home.

“What we do is try and break the cycle - asset prices and houses are increasing so there’s a lot of new entrepreneurs that don’t have access to that level of security for their businesses,” he said.

Speers said while banks offered invoice finance and trade finance, asset-based lending brought it all together, provided flexibility and avoided the need to have “14 different products just to get working capital”.

While other companies provided asset-based lending for big business, Speers said Grow Finance was offering it in a unique way to SMEs and its proposition would be market-leading.

He said brokers had an important role to play as finance experts who can advise their customers about Grow Finance’s short-term working capital solutions to help them deal with rising prices, higher interest rates and supply chain problems.

Verschoor said Grow Finance would become the “non-bank of choice” for businesses borrowing up to $5 million.

“Andrew and his team will be instrumental in evolving our working capital division, with a focus on achieving scale via new generation product development and extended distribution via the broker network,” said Verschoor.

“Andrew is an industry innovator and has a long track record in delivering change and product developments,” Woszczalski said.

Grow Finance was recently named the number one Australian high-growth company for Asia-Pacific by the Financial Times.