So, if you haven’t already known, the 4 digital banks that were granted status by MAS a couple of years back are about due to make their launch towards the end of this year and early 2023. However, we haven’t really heard much action, at least not until a couple of days back where ANEXT Bank, the wholly owned subsidiary of the ANT Group released some details on their new SME financing product - ANEXT Business Loan with interest rates as low as 6.8% p.a. (EIR), (even lower than rates offered by the Working Capital Loan by banks which have a risk share component with Enterprise Singapore). That’s something noteworthy and we can’t help but give you a short breakdown on what we know for now and found out from the Singapore Fintech Festival 2022.
Key Features of ANEXT business loan:
- Max loan amount: $300,000
- Min loan amount: $5,000
- Loan Tenor: 5 years
- Interest Rate: As low as 6.8% (EIR)
- Zero Admin Fee
- No collateral required
So in terms of product, the ANEXT Business loan seems to be able to exist in two forms. One is a “Pay-per-use” which is what we call a revolving line of credit with a maximum limit of $100,000 and another is a “pay monthly” which is business term loan of limit up to $300,000. So other than their product names, are they really any different from traditional banks. Here are 3 key things we identified that made them stand out.
1. Zero Document Application
You think you heard wrong? Nope. With the digital bank’s emphasis on financial inclusivity, loans less than $30,000 require no documents at all. However, it is important for us to take a step back and understand how that compares to the traditional bank’s credit assessment process. The answer is just a reduction in 1 document. That is the bank statements. In fact, for SME clients who already have bank accounts with the three local banks, their application also requires no documents at all. Our last article on DBS Quick Finance covers that quite well. Also, this simply means that in such cases, since bank statements are assessed, personal information such as your NOA and CBS score will be the primary determining factor to your loan.
For loans that are more than $30,000, your 6 months bank statements are still required.
2. Loans as low as $5,000
If this isn’t financial inclusivity, I don’t know what is. Most traditional banks would hardly entertain a business loan of less than $30,000 and what more $5,000. This is simply because of the level of maintenance and monitoring that is required and perhaps even the cost of a loan officer handling your application. So ANEXT’s ability to service clients with smaller needs might be due to their ability to digitize their processes and credit assessment.
3. Sharp pricing as low as 6.8% p.a. (EIR) with zero admin fee
If anything surprised us, it is its ability to price out major banks. One of the key hallmarks of success for a digital bank is to provide greater competition within the industry and ANEXT bank has clearly done that. 6.8% p.a. is well below the industry average of approximately 7.25-8.25% p.a. which are offered under the Enterprise Financing Scheme (Government Assisted). The cherry on top? No admin fees. That’s a whopping 1% saving instantly.
How to apply?
Like most of the other digital banks, public launch is not available, and applications are kept within a closed circle. One of the few are with the clients of INFT and Bizmann Systems which service about 15,000 SMEs. This will allow clients to also experience ANEXT business account and make actual operational transactions. Lendingpot is also closely kept in the loop with ANEXT and you can sign up with us to get first access when application opens.
We at Lendingpot are excited about ANEXT’s new product launch and greatly anticipate the impact that they can bring to the SME community. At the same time, we look forward to their other digital banks to see what exciting new developments they can also bring to the table. Want to find out more about the available financing options for SMEs? Arrange a chat with us and we will be happy to help.
Benjamin heads up Lendingpot with a background in all things SME. He was previously a commercial banker at Citi with experience in Relationship management, Credit Risk, Trade Operations and Corporate FX sales; and understands the difficulties SMEs face in this opaque world of SME financing.