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It takes more than inspiration, skills and hard work to get a small business off the ground. Almost inevitably capital is required, yet some people with great ideas, acumen and the tenacity to run a successful enterprise struggle to access the funds needed to make a go of a start-up venture.
Recognition of this was the impetus for the recent introduction of NAB Microenterprise Loans – unsecured business loans of between $500 and $20,000 for people on low incomes who have few or no avenues to access affordable business credit.
As Glenn Brennan, NAB Manager of Corporate Social Responsibility, explains; “Some people need a bit of extra help. We’re acknowledging that while they might have what it takes to start a new business or grow an existing enterprise, not everyone meets the traditional criteria to obtain credit,” he says.
While the concept of microfinance has been widely embraced in developing economies, in comparatively affluent nations, such as Australia, financial institutions have generally not offered assistance in the form of unsecured loans to those who fall outside the parameters of lending criteria. NAB is pioneering Microenterprise Loans on
a not-for-profit basis to help kick-start
or support businesses with five or
fewer employees.
“We’re backing individuals, and what we’re looking for from applicants is ‘sweat equity’ – that is, people who not only have the ideas but who have the skills and are willing to put in the effort. They must have the right business plan and be keen and able to run a business,” says Brennan.
The application process for Microenterprise Loans is currently running through a number of business support programs including:
- Enterprise Network for Young Australians (ENYA) – providing support for people aged 18 to 29 years wishing to start a new enterprise. The Microenterprise Loan application process through ENYA is largely web-based.
- Enterprise Plus – supporting businesses which have been operating for at least six months and have been involved with the New Enterprise Incentive Scheme (NEIS).
- Incubator Connect – supporting businesses who are currently tenanted or supported by small business incubators through Business Innovation and Incubation Australia.
- Local Enterprise Hubs – supporting start-up or existing microenterprise hubs in specific locations around Australia.
The liability for NAB Microenterprise Loans sits with the applicants, not the businesses. Partnering with business support programs ensures applicants have access to additional support to develop their business plans, hone their skills, training, advice and mentoring throughout the first year of business. As Glenn Brennan says: “We’re making sure they have every opportunity to succeed.”
NAB MICROENTERPRISE LOANS
Size: $500- $20,000;
Interest rate: 9.95% p.a (fixed); up to 3 years repayment period and 90 day access period is interest free.
CASE STUDY
Long-time NAB customer Teresa McDowell needed funds to expand her fledgling home-based business, ‘Hemp Hemp Hooray, Cream of the Crop’ – a skin and body care product range made from organic hempseed oil. In particular, she wanted to increase stock levels to cater for growing demand, develop a website and point-of-sale advertising for new retail customers.
When the mother of three from Mount Barker in South Australia spoke to a NAB Business Banker about a loan, it quickly became apparent that with no assets to offer as security, a business that had been running for just four months and limited savings she would not meet normal lending criteria.
However, “Teresa had a good business plan, retail experience and heaps of personal drive,” says business banker Renai Leonard. “She’d already spent what little money she had getting the business up and running and had eight products.”
Teresa was approved for a NAB Microenterprise Loan of $6000 and, under the conditions of the unsecured loan, has agreed to work closely with the Adelaide Hills Business Enterprise Centre receiving mentor support over the next 12 months while she works hard to grow the business.
“As a new business, inevitably there were cash flow problems as I’d started with limited capital and it needed to grow,” says Teresa. “The loan has delivered a real boost. It’s been pivotal for marketing, providing new opportunities to reach customers.”
For more information about Teresa and her products visit www.hemphemphooray.com.au.
