Kikka to offer seven-minute loans for SMEs

Perth-based financial services firm Kikka Capital has partnered with a US financial technology firm to launch an Australian-first online lending platform aimed at small to medium-sized businesses, offering loan approvals in just minutes.

Kikka Capital said its partnership with Kabbage would accelerate its entry to the online lending market and allow it to offer SMEs working capital facilities up to $100,000.

The platform, developed by Kabbage, allows the analysis of small business data, including sales records, transaction information and shipping records, in real time.

Kabbage has provided more than 225,000 loans in the US and the UK, lending a total of $US550 million via its platform.

Kikka Capital chief executive David Brennan said the technology allowed for approval of finance in just seven minutes.

“Typically banks take six to eight weeks to approve a loan and that time is just wasted,” he said.

“The problem with accessing finance for SMEs is there is a fundamental difference between what banks want and what SMEs can produce or are willing to give.

“The information that the bank requires is sometimes lacking in a business, and if it is there, they have to spend money getting accountants’ records and that sort of stuff.

“What we do is we use this technology to allow a business to connect their real-time performance and we can provide a loan decision based on that information rather than traditional credit information.”

Mr Brennan said typical repayment terms would be six months, at 2 per cent per month interest.

He expects the majority of loans to be between $10,000 and $20,000, with recent Reserve Bank of Australia statistics showing around 55 per cent of Australian businesses with turnover under $10 million funding business development using personal credit cards.

“This is definitely a new style of underwriting in the Australian market,” Mr Brennan said.

“It’s a fast, simple and very secure way to apply for finance outside of the banking system and it’s a genuine relationship between us and the business borrower.”

Kikka's pool of funds will come from debt finance and internal balance sheet funding.

Kabbage head of business development Pete Steger said the company believed there would be significant demand for online small business loans in Australia.

“We are confident Kikka Capital is the right partner to put the power of business growth back into the hands of small business owners by providing them with instant access to capital,” Mr Steger said.

Kikka Capital will launch the platform in Australia in May.