SME lender Avenue Bank granted restricted banking licence

Small business shop front.

Avenue Bank, a digital business bank with plans to shake up the SME lending sector, has been granted a restricted banking licence by the Australian Prudential Regulation Authority (APRA).

Founded by entrepreneurs Colin Porter and Dale Hurley, the Sydney-based bank will cater to small and medium-sized businesses looking for “next-generation cash flow solutions.”

Chief executive George Confos said the banking licence, while provisional, marks an important milestone for the business.

“We’re bringing to market a 21st century business bank for 21st century SMEs. We’re looking at the ways we can innovate products for this underserviced market,” he said.

“With our offering and our technology, we can work closely with our customers to help map their future cash flow. We aim to be a cash flow partner and you need to be a bank to do that.”

With many SMEs still reeling from the impacts of the COVID-19 pandemic, Avenue Bank hopes to help Australian businesses get the funding they need without resorting to using their home as collateral.

“We are a smart, digital bank that doesn’t rely on bricks-and-mortar security. We are building an automated credit process which focuses on both financial and non-financial aspects of a business,” Confos said.

RELATED: SME Recovery Loan Scheme expanded to help beat lockdown slump

Under the restricted ADI framework, Avenue Bank will be able to conduct limited banking business on the way towards achieving its full ADI licence.

This pathway gives new entrants into the banking industry a maximum two year period to develop their resources and capabilities. At the same time it must satisfy strict prudential requirements laid out by APRA.

If an applicant is unable to manage its risks effectively, it will have its licence revoked.

Avenue Bank has already added a number of industry veterans to its team, including Steve Kinsella, who has occupied leadership positions at both Bankwest and CBA.

It also recently closed a $37 million Series B funding round, counting Melbourne-based lender Liberty Financial Group among its backers.

Liberty chief executive James Boyle said the two companies shared a common goal in catering to a market looking for alternatives to conventional finance companies.

“We see great opportunity for Avenue Bank in an area ripe for innovation. It’s also immediately adjacent to the SME sector that the Liberty group has provided products and services to for much of the last 20 years,” he said.

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