American Express will leverage its global brand to provide unsecured small business loans, a first for the business outside of the United States.
The launch of American Express Business Loans will provide unsecured capital between $ 5,000 and $ 250,000 to SMEs in Australia at annual interest rates starting at 10.95%.
Martin Seward, vice president of global business services for American Express Australia, says the need for the new product is based on AMEX’s own research, which found Australian SMEs are seeking $ 130 billion in capital.
âWe certainly believe that small and medium-sized businesses face challenges accessing cash and working capital at the best of times, but during COVID-19 it became even more difficult,â Seward said. SmartCompany.
AMEX’s survey of more than 1,000 companies found that more than two in five companies are looking for loans this year and that 26% need capital as a direct result of the end of JobKeeper.
“It is really starting to take shape as two sides of a story for SMEs: some are still facing COVID-19, while others have rebounded and are looking to grow,” he explains.
AMEX first launched business loans in the United States in 2017, and Seward says demand has seen “double-digit growth in the past three to four years.”
Unsecured loans allow borrowers to access capital at lower interest rates than credit cards without having to secure the loan against personal property.
AMEX’s decision to offer business loans in Australia will see the financial services company compete with the Big Four banks, as well as fintechs such as Judo Bank, Prospa, Get Capital and Moula.
While the Big Four banks have unsecured loans available for their business clients, many business clients need to secure their loans against assets in order to access funds.
Neil Slonim, an independent SME finance advocate, says the advantage of AMEX’s unsecured business loans over those offered by fintechs is that they are an established, global brand.
None of these fintechs “are an established global brand, none of them had an existing customer base and, as startups, they all struggled to access low-cost funds,” says he.
AMEX, on the other hand, is an established brand, with an existing customer base, and because it’s a global bank, it has access to low-cost funds, Slonim says.
âAMEX doesn’t offer anything that Judo, Prospa and Moula wouldn’t,â he said.
To provide the loans, AMEX has partnered with the global ODX origination platform and will initially offer the loans to a select group of American Express business card members, with more customers invited to apply in the first half of the year. of this year.
AMEX was unable to confirm how many cardholders exist in Australia, but did confirm that at the end of 2019 there were 114 million cards in force globally.
Over the past three years in Australia, AMEX has signed on average over 50,000 new merchants each year.