Why You Should Work With Specialty Hotel Lenders
The Australian lending landscape held steady for many years with the big four banks standing in the most prominent position, generating a profit pool of around $30 million each year. However, over the past 5 years the landscape has begun to adapt as small non-bank lenders step up to compete with these legacy brands.
For consumers, this is a big win, as more competition within the financial services industry often results in a broader range of funding products available and at more competitive terms. In 2019 the statistics reflected this shift away from traditional finance, with a decline of 12.5% in the total loan value across Australian’s major banks. There was a corresponding rise in the loan value among non-bank lenders of 42.4%, suggesting that the role of these alternative lenders is becoming more significant.
As we examine why non-bank lenders are rising in popularity, one standout reason is their tendency to specialize in particular markets. Alternative lenders often service niche markets and develop tailored funding products designed to meet the unique needs of those operating within that industry. This is great news for business owners who don’t necessarily fit the cookie-cutter offerings of traditional lenders but are still seeking funds to establish and grow their business.
For hoteliers, the requirement for constant renovation and refurbishment can be a financial strain. Finding a funding partner that can offer an ongoing solution for this can help ease this burden and give hoteliers confidence that they can continue to undertake projects within their renovation cycle. However, finding the flexibility to achieve this with a traditional lender can be difficult, due to lengthier approval timelines and more stringent collateral requirements.
This is where specialty funders can step in, offering up tailored solutions that take these unique needs into consideration. Non-bank lenders can provide more flexibility in the terms of their funding to meet hoteliers’ circumstances, and often operate under a less risk adverse matrix than traditional lenders.
Along with the more tangible benefits, there is the customer experience to consider. Specialty lenders often operate closely alongside businesses and suppliers within the industry they service, giving them a unique insight. These relationships allow the lenders to better understand the needs and wants of their borrowers and take this into consideration in their lending experience. In fact, an outstanding 90% of SMEs surveyed by Banjo said they preferred their experience with alternative lenders over the banks.
These relationships can also have other benefits, many specialty lenders establish preferred supplier connections within their industry. This can mean the process from picking out your products to obtaining funding is streamlined as there is an established procedure. The same concept can also apply to business owners who are part of a larger chain or franchise, who may have a funding agreement established with one or more lenders.
We encourage accommodation business owners to explore their funding options and take into consideration smaller specialty lenders as well as the big banks. There are a wealth of benefits in working alongside someone who operates exclusively within the accommodation industry. If you are looking for a specialty hotel lender, talk to the team here at Accommodation Finance Australia about our tailored funding solutions.