Judo Bank Review (2021)

Judo Bank offers 3 different products for small businesses to accommodate a range of different needs. With Judo Bank you can choose between the following loans:

• Business loans
• Line of credit
• Asset Finance / Equipement loans

All loans range between $250,000 and $10,0000 and require some form of security. This means Judo Bank is not the best option for your SME needs a small loan or lacks suitable assets to use as security.

Judo Bank doesn’t provide much information about specific requirements for a loan however, the lender does try to keep an open mind when it comes to the provision of business loans.

Loan size $250,000 to $10,000,0000

Business loans are useful if you wish to grow your business, make large purchases, increase your cash flow or maintain daily operating costs. This working capital is given to you in one lump sum for which you will begin paying interest costs straight away. With Judo Bank, business loan range between $250,000 to $10,000,000, so you need to consider if you need at least all $250,000 at the start of the loan as you will need to pay interest for any portion you are not using.

Loan term – depends on business needs
Payment Schedule –  monthly, quarterly, half-yearly or seasonal
Security – business or property assets

Judo Bank will match the length of the loan your business needs. The loan terms will vary according to the size of the loan, business revenue and other expenses. In the same vein, Judo Bank designs its repayment schedule so that you can pay when your business is most likely to have the funds to meet payment commitments.  You can choose between monthly, quarterly, half-yearly and even season repayment.

Interest Rates – variable interest (based on Judo Bank market rate adjusted on 1st each month), fixed interest or combination
Payment cost – principal + interest rates, interest rate only

Judo Bank has a range of cost options and will work with you to find the best option for your needs. You can choose between variable interest, fixed interest or a combination of the two. On the 1st of each month, Judo Bank adjusts its market base rate which is the variable-rate you will pay. This base rate is determined by the bank bill swap rate (BBSW bid rate), the banks funding costs and market conditions.

If you think interest rates will increase then you may prefer fixed interest rates instead of variable rates. While the Judo Bank website does not show their fixed interest costs, studies show you will generally pay more with fixed interest. As a borrower, it can help to keep in the mind the length of the loan, longer loans mean more opportunity for changes in variable interest rates. The other thing to keep in mind is that Judo does charge fees for early repayment with fixed interest rates and these costs are determined by:

• How much of the  loan being you pau early
• The period remaining of the loan remaining with a fixed interest
• What your contracted loan repayments are
• Any differences between the wholesale interest rate between the first day the fixed rate for the loan and at the time you make the early repayment.

In addition to a choice of interest rate types, you can also choose between principal plus interest rate or interest-only payments. Where possible, it is a good idea to pay the principal where possible as this will reduce the interest you need to pay over the life of the loan. If you are unable to pay the interest principal and interest, then you can pay the interest only. At some point, you will need to pay the principal are you will not be reducing your debt.

Loan size $250,000 to $10,000,0000

A line of credit loans (loc) is a good alternative to a business loan when you don’t need access to the entire loan upfront. This arrangement can save the business on costs as you only pay interest on the amount you draw when you need it rather than pay interest on the entire loan from day one. Unfortunately, Judo Bank website does lack some details about how the loc works, so it is unclear if there is a minimum loan size of $250,000 or a minimum drawdown of $250,000. This detail can be useful as a Judo Bank loc is best if you wish for pre-approval for a loc of $250,000 or greater that can const of multiple drawdowns of smaller size rather than a business loan of $250,000 all at once.

Loan term –  12 months then reviewed annually
Payment Schedule – no fixed schedule
Security – business or property assets

The Judo Bank website lacks information about how their line of credit works, which makes it difficult to provide information with much detail so it would be inappropriate to write about these features. It would be fair to say, that it would be better if the bank had more transparency with how the line of credit works.

Interest Rates – variable interested rates based on Judo Bank market base rate

The Judo market base rate determines what variable interest rates you will pay. Judo Bank reviews this on the 1st of each month and this rate can move up or down depending on a range of factors. Unfortunately, it is unclear if you must pay principal + interest or if the lender allows an interest-only period.

Loan size $250,000 to $10,000,0000

Asset finance is a type of loan that helps business purchase the assets and equipment that they need to maintain operations or grow. This type of arrangement helps your business maintain its working capital in situations where the asset may expensive to purchase outright. Loans for assets such as equipment, property and inventory start from $250,000 and go up to $10,000,000 making Judo Bank a good choice for large investments.

Loan term –  5 years (or the life of the asset)
Payment Schedule –  monthly, quarterly, half-yearly or seasonal
Security – Asset or equipment being financed

A loan of a quarter of a million is quite high, so it is good thing Jod Bank gives you up to 5 years matched to the effective life of the asset to pay the loan. Borrowers will also appreciate the flexible repayment terms which can be monthly, quarterly, half-yearly or even seasonal if your business depends on high seasons for most of its cash flow.

When taking out a loan, you will need to secure the loan with collateral. Asset finance will usually use the asset you are purchasing for security, which is good if your business doesn’t have asset available to use.

Interest Rates – Fixed interest
Payment type – Principal and Interest with an optional balloon

Unlike business loan and line of credit, Judo Bank charges you fixed interest for the loan. This interest will be determined by how much you borrow, how long you need to pay the loan, the business cash flow and credit rating. When making payments, you will need to pay principal and interest however there is an optional balloon.

As asset finance has fixed interest, there will be early repayment fees. This means if you pay the loan before the end of the loan term, you will need to pay a fee as Judo Bank calculate your interest on the expectation you will take then full loan period to pay the loan. If you replay the loan early then Judo Bank will incur some financial loss which they need to recover.

To apply for a loan, you need to provide your personal contact details on the Judo Bank website or call the lender directly and they will get back to you as soon as a consultant is available. To have a Judo Bank consultant contact you, you will need to provide the following details:

• Full name
• Company name
• Postcode
• Email address
• Phone number
• The type of business finance you need
• A short message of your requirements

Judo Bank prefers a more human approach to the application process. Unlike many fintech online small business lenders, Judo Bank does use an automated online application process which performs credit and finance checks in order to give you pre-approval for the loan.

While the website does not provide information about what information you need to provide Judo Bank with, we contacted Judo Bank for information and they asked us to provide the following:

• What has been your businesses turnover and average profit over the last 2 years?
• Do you have 2 years of financial statements readily available?
• How much are you looking to borrow and what is the purpose of the loan? (if the required funding is for working capital or growth please provide a detailed breakdown)

With this information, a business banker will contact you to help get things moving with the loan.