While small business loans can greatly assist any SME, it can be daunting trying to determine which lender is providing you with the best deal for your company. This is where SMART Box™ comes into play, as it is a simple and recent tool for disclosing standardised pricing of small business loans.
In this post, we’re going to delve into SMART Box™ in more detail, as well as how it can help you when considering business finance.
What is SMART Box™?
SMART stands for ‘Straightforward Metrics Around Rate and Total cost’. Essentially, it is a one-page disclosure document which summarises basic business loan elements such as:
- Loan Amount
- Disbursement Amount
- Total Repayment Amount
- The expected Loan Term
- Repayment Frequency
These can be found at the top of the page.
The document also covers common loan pricing metrics below this section, including:
- Total Cost of Credit
- Average Monthly Payment
- Total Interest Payment (TIP)
- Annual Percentage Rate (APR)
- Cents on the Dollar
- Factor Rate
Additionally, applicants can find information relating to loans which are paid-off early, including whether new fees or a reduction in the Total Payment Amount are applicable. You can view an example of SMART Box™ here.
How Do SMEs Benefit from SMART Box™?
Before the development of SMART Box™, small business owners would have little information when it came to comparing business loans. Some may even liken it to comparing apples and oranges. SMART Box™, however, provides a clear and concise loan summary sheet before a loan is accepted. It allows applicants to see the key features of the product in one easy-to-read document. By showcasing several metrics standardised in calculation and presentation, it allows business owners to determine which lender can provide the best loan for their needs.
What is Lumi’s Role in SMART Box™?
As of the start of 2019, Lumi is one of just seven online lenders compliant with AFIA’s Code of Lending Practice. As part of the code, we utilise SMART Box™ to ensure we’re being completely transparent with our product. Lumi has always pledged itself as a transparent online business loan lender and the development of SMART Box™ allows us to assist small business owners in gaining a realistic comparison of loans offered by Code-compliant lenders.
Read more: ‘Top seven fintech business lenders compliant with new code of conduct’ on Australian Financial Review and ‘Australian Finance Industry Association’s SMB lending code finds champions’ on The Australian.
Want to find out how Lumi can help you with a totally transparent unsecured business loan? Visit our website or call 1300 00 LUMI today.