Goldman Sachs-backed lender Capify taps into loan optimism

“There’s a lot of government-backed loan programs out there to assist SMEs but there’s been no shortage of articles that the big banks are just not deploying the right amount of capital. So we think that we will have some good success deploying it out to Australian SMEs either that could not get approved for government money or looking for a different solution.”

Capify’s average transaction size is between $30,000 and $40,000 and Mr Goldin said the fintech was on target to deploy about $1 million before COVID-19.

“We think demand will start to spike in the next two or three months as businesses spend the government money or are ready to start expanding again as restrictions are loosened,” he said. “I think initially they borrowed to stay afloat. And I think the next phase of this will be to borrow to be able to grow.”

Mr Goldin declined to name Capify’s new investors as he said they were private individuals.

Capify will use the funding to improve its sales and marketing in Australia and the United Kingdom and to invest in new technology to make the platform more seamless for users.

Mr Goldin said he was hopeful the government’s plan to axe responsible lending laws which Treasurer Josh Frydenberg announced last week would increase demand for loans.

“The more avenues and the more small business owners can get access to capital, we believe is better for our industry as well, not just for the banks, because it will increase demand, which is ultimately what we’re looking at,” he said. “During this pandemic it’s one thing that we have the supply being the capital, but you also need demand from the SME business owner, and that is going to take time also for confidence to increase.”

The small business lending market has seen an influx of new entrants over recent years from the rise of fintechs like Prospa, Tyro and Zip Co and the launch of SME challenger bank Judo.

Mr Goldin said not all would survive the coronavirus pandemic and tipped merger and acquisition activity in the sector with Capify in negotiations with another fintech.

“I think there will be some consolidation opportunities to come out of COVID for those that are well capitalised to look at these opportunities,” he said.