- Judo Bank, Australia's first digital business bank, has become the first bank chosen to receive funding from the Australian Business Securitisation Fund (ABSF).
- It will receive $250 million in funding from it to lend out to Australian businesses as they struggle through the coming months amid the coronavirus shutdown.
- Judo also expects another $250 million from the government's Structured Finance Support Fund.
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With the federal government eager to get money into the hands of Australian business in need of it, it's turned to Australia's first digital business bank to do it.
This week it agreed to give Judo $250 million via the government's Australian Business Securitisation Fund (ABSF), the first financial institution in the country to receive funding from it, to lend out to businesses at a time when they need it most.
"We're seeing levels of stress particularly in those areas most directly and immediately impacted by the shutdown, as well as further down the supply chain," Judo's co-founder David Hornery told Business Insider Australia. "But the government has intervened and offered some really strong support."
The fund's aim is to help provide equity to small and medium businesses, funding loan operations outside the major banks, with a string of Australian fintechs like Prospa, Zip and Flexigroup all understood to be vying for cheques.
"The fund is important because it is trying to deepen the pool of funding for businesses which we need, but also to introduce competition which is one of the most fundamental ways to change the market," Hornery said.
Judo, which has surpassed $1.4 billion in deposits, meanwhile is also in line to receive a separate $250 million from the government's Structured Finance Support Fund.
In total, it'll see Judo lend out $500 million in "timely" government money to businesses as they struggle to make it through the coronavirus downturn.
"Inevitably some businesses will close but the government has acted very decisively and very substantially to mitigate some of that," he said.
While consumer neobanks have been criticised in the past for not offering face-to-face service, Judo is in a particularly unique spot, as the big four are inundated with customers suddenly in need of assistance.
"We've got 600 customers and 55 bankers, so each looks after around a dozen clients. It means we can proactively and consistently guide them and talk them through this period," Hornery said.
"It's at times likes these that relationships, real relationships, with people come to the fore."