Nimble’s Greg Ellis and Sean Teahan found themselves living from pay to pay, with no real, palatable alternative.
The average national savings rate has tripled in the past three years, but averages can be deceptive.
Living from pay to pay is the way most of us operate throughout our working lives. And that is what it was like for Greg Ellis and Sean Teahan, the founders of Nimble, an online, short-term lending business and BRW GE Mid-Market Award finalist.
Ellis says: “Sean and I both found ourselves, as many people do, living from pay to pay, with no real, palatable alternative. There are the loan sharks. Or there’s taking a credit card, which can be seductive if you just want a few hundred bucks to tide you over.”
The two tech-heads saw the need for a simple, quick and transparent online short-term lending business. Borrow no more than $1,200; take no more than 50 days to pay it back. An online calculator shows exactly how much the loan will cost, according to how much you want and how long you want it. For $500 for five weeks, repaid fortnightly, the cost is $120 in fees (24 per cent). That is a 20 per cent establishment fee, plus 4 per cent a month. A default costs $7 a day, plus $35 for every dishonour fee.
That’s not too steep for most people, but most get knocked back. Just under 20 per cent of applicants are successful: they are employed, have an average annual salary of $55,000, and most have a clean credit history. “It is just about choosing a quick, convenient way that is not a credit card,” Ellis says.
The application usually takes about five minutes, and once it is approved, it’s in your bank within the hour. An algorithm does most of the work in qualifying applicants. Approval time has slowed down a bit since the introduction, on July 1, of new laws that require lenders to see three months of bank statements from applicants, a measure to prevent people getting loans from multiple lenders.
Ellis has no quarrel with the new laws, hoping that it will clean up perceptions of the pay-day lending industry, which has a reputation for ensnaring the poor in unmanageable debt.
For the first few years, the two mowed lawns to make ends meet. By 2011-12, the company’s revenue reached $12.6 million. It’s likely to be double for 2012-13, but Ellis is not releasing the figures just yet.
The pair are not newbie entrepreneurs. They met in Ireland (Teahan is the native) while they were both working in accounts for a telecommunications company. When regulatory changes lead to a demand for pharmacists in Ireland, they created an online recruitment site to bring professionals from Australia and New Zealand. “It was a teeth cutting exercise,” Ellis says. “It was the early 2000s and the internet was in its infancy. It added greatly to our understanding of the net.”
When they sold it, and Ellis jetted home, Teahan came for a holiday and stayed. Nimble was born in 2005, first as Cash Doctors, and with another partner and a shop front. When Ellis and Teahan wanted to go exclusively online, they bought out their partner. They attracted $1.5 million in venture capital from iSelect founder Damien Waller, and former Wotif group chief financial officer, Sam Friend. (Recently, they raised more, but Ellis won’t say how much.)
The name change was part of the deal, but it also spells out the business ethos, Ellis says. “Measured, non-political aspect, agile, non-bureaucratic. And for customers, it means not tied down.”
They are used to working lean. Now, with investors’ money in the bank, and an experienced board, including Waller, Ellis expects to ramp up the business. He’s not worrying about exit strategies; he’s working on a new TV ad campaign.
Getting investors involved has been their best decision, Ellis says. There have been plenty of offers over the years, but they held out until the right people came along. “The guys on the board think big like we do.”