In an Australian first, digital SME lender Lumi has launched Lumi Lux – a business loan that rewards customers for good repayment history over the term of the loan.
Through Lumi Lux, borrowers will see their interest rates drop by 25 basis points every six months to a maximum of 2% annual percentage rate (APR). The loans range from $200,000 to $500,000 with interest rates from 14% to 20% APR. Meanwhile, the loan term can go up to four years for more established businesses.
Luni CEO Yanir Yakutiel (pictured) said the innovative loan would provide businesses with more certainty at a time when interest rates are expected to rise.
“In a rising interest environment, we wanted to develop a product that is countercyclical and actually decreases your rate over the term of the loan,” Yakutiel said.
“Lumi Lux opens a new chapter in business lending. It is the only business loan in Australia that dynamically rewards customers for good repayment histories over the term of the loan.”
Read more: Building cost blowouts – how brokers can help
Lumi Lux was also designed in response to customers requesting a larger loan product over a longer term. Having a loan term of up to four years would enable established businesses to spread repayments over a longer period.
“Since t.’s nothing like the Lumi Lux business loan on the market, finance brokers will have a unique product to offer clients looking for larger loans with longer terms and unique features,” John Clifford, head of third party at Lumi.
“We have many customers who have adapted and grown stronger through the COVID era. They’re looking for business funding that has adapted and innovated as they have.”
According to Yakutiel, Lumi Lux is aligned with the noticeable shift businesses have made from traditional banks to non-bank lenders in seeking capital to invest in capital equipment, construction projects and inventory management.
Read more: Commercial lenders positive about the future
“We’ve seen a rise in total capital requirements by the private sector over the past five years, which has supported demand for non-bank lending,” Yakutiel said.
“Lumi Lux was designed for more established customers who want to take their businesses to the next level. As a result of COVID, we are seeing a very strong theme of SME economic activity and consumption in many sectors moving away from CBDs, w. businesses tend to be smaller and owner-operated.”
Further to Lumi’s mission to help Australian SMEs flourish, it launched the Lumi Payment Pause last year. The product is a four-week interest-free repayment pause that won’t affect credit scores and does not accrue interest during the deferral period.