Business loan

Lumi Lux offsets rising business loan rates with automatic discounts

Rising interest rates and fragile consumer confidence have tested many Australian business owners this year, but non-bank lender Lumi hopes to extend a lifeline with an innovative business loan option.

Called Lumi Lux™, the loan rewards good repayment behavior with periodic discounts. As long as there are no loan repayment arrears, defaults or loan breaches, a reduction of 25 basis points will be applied every 6 months (up to a maximum reduction of 2% ).

“In a rising interest rate environment, we wanted to develop a product that was countercyclical and actually lowered your rate over the life of the loan,” said Lumi chief executive Yanir Yakutiel.

He gives the example of a loan with a starting rate of 14% per annum Assuming no rate hikes occur, rates will drop to 13.75% per annum six months after the settlement date, then to 13.50% after 12 months.

Businesses can access financing between $200,000 and $500,000, with interest rates ranging from 14% per year to 20% per year depending on the age of the business and its annual revenue (among other factors). ).

It’s important to note that the loan is designed for more established businesses, so having weathered the tumultuous times of COVID will help when applying. Property is also required as collateral.

A significant portion of business investment is fueled by debt, so rising interest rates tend to reduce the opportunities for businesses to hire new employees, purchase equipment and expand operations.

By offering financing at periodically updated rates, Lumi hopes to alleviate some of the stress caused by a rapidly changing interest rate environment.

Further help is available through Lumi’s Payment Hold option, which allows businesses to take a four-week repayment holiday without having to worry about the impact to their credit scores.

No interest will accrue during the four-week period, as is usually the case with repayment deferrals. Businesses will simply resume making the same repayments as before, but with an additional four weeks added to the term of the loan.

Just keep in mind that loan repayments can only be suspended once during the agreed loan term, cannot be split, and are granted at Lumi’s discretion.

To compare the financing solutions currently available, visit our business loan comparison page or browse the selection below.