Founded in 2018, Judo Bank (previously known as Judo Capital) keeps its headquarters in Melbourne, Australia. At this point, they are a fintech startup in the truest sense of the word – disrupting the Australian banking market like never seen before.  

In this Judo Bank Review, we’ll break down exactly what this fast growing neobank / business bank Judo has to offer, we learn more about their strategy and explain what makes them unique in the Australian banking sector. Ultimately  determining if they’re a good choice for SME lending and other bank functions. Read on for our full Judo Bank Review to learn more.

🌐 Website:	https://www.judo.bank
®️ Logo:
📝 ABN:	615 995 581
📝 Credit License:	501091
💰 Loan Amount	$250,000 to $10,000,000: Unsecured business loans, equipment loans, Line of Credit and Bank Guarantees
⏲️ Loan Term	Business Loans – Flexible repayment terms  Equipment Loans – Up to 5 years Line of Credit – Reviewed annually
💸 Unsecured Loans?	Yes
⌚ Lender Requirements	Judo operates the 4 C’s model to assess borrowers – character, capacity, capital and collateral
📃Security  Required:	86% of Judo Bank’s loans are either fully secured or partially secured
⏱️ Response Time:	5 days
🌝 Easy to Apply:	No. There is no online application but you can input your details to hear from a member of the Judo Bank team.

The Nitty-gritty

💌 Online Reviews:	Average rating of 4.4 / 5 from 591 reviews
🏆 Awards and Recognition:	Judo Bank was ranked among the top 10 independent neobanks across the globe by WhiteSight’s Top 20 neobanks of 2020 research The firm has also won various industry awards for their term deposits product
💳 Minimal Interest Rates:	Fixed or variable interest rate depending on the type of loan
⚖️ Advantages	Dedicated relationship managers Wide range of financial products Internet banking and financing at the same spot Banking licence Transparent and cheap loan pricing
⚖️ Disadvantage	Minimum loan amount of $250,000 Higher requirements than some lenders Early repayment costs
Compare Judo Bank	Compare Judo Bank with 30+ Australian Lenders on Lend.com
Review Table of Contents	Judo Bank Company Story Judo Bank Products Judo Bank Loan Pricing Judo Bank Client Reviews Judo Bank Loan Compatibility Judo Bank Summary

IMPORTANT NOTICE: Business lending with Judo Bank begins at $250,000 AUD. To borrow unsecured amounts below this you should consider our highest rated small business loan providers

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JudoBank Story:

In March 2018 Judo Bank launched with a bang, setting out to disrupt the Australian banking sector for SMEs, and making itself a prominent solution SME bank accounts in Australia. At the time of launch, Judo Bank held a lending licence only, just a year later the firm  achieved its full banking licence in April 2019. It was a sign of intention that definitely showed the market they weren’t going to wait around and operate in the same cumbersome fashion as Australia’s legacy banks. It’s a move that looks to have paid off. The banking licence has since allowed Judo Bank to accept customer deposits in addition to the business lending functionality it offered since inception. Hence it was also rebranded from Judo Capital to Judo Bank. Judo’s multi-award winning term deposit product has already attracted over $4 billion in deposits, whilst its loan book grew to upwards of $6 billion in the FY2022.

Why have they generated such a buzz in Australia’s fintech industry? According to recent surveys, there is an $80 billion funding gap between SMEs and the financial establishment. As an industry, big Australian banks scored a 2.5/10 for trustworthiness, according to a poll of small business owners. And whilst Judo Bank is a ‘neobank’ in the sense it has no physical branches, categorising Judo as fintech-only would be doing them a disservice. Judo was born to address a clear market failure where SMEs feel unloved, undervalued and underserved by the finance industry. Judo knows a purely online offering would not go to solve these fundamental issues so at the heart of Judo Bank’s strategy is its relationship banking model for SMEs. All customers are appointed with a local account manager within their state that they have on hand whenever they want tailored advice and proper answers. Making sure that a customer’s voice is heard, even if they aren’t always able to offer finance.

The advantages of their specialist SME focus has been well demonstrated in their recent full year 2022 results presentation:

Using a clever analogy, Judo explains that just like the best specialist long-distance runner will always exceed the best decathlon runner, their specialist SME banking service will bring value that generic universal banks do not.

Judo Bank Private Funding

Over four funding rounds the firm raised a staggering $1.05 billion ($140m in series A, $400m series B, $230m series C and $280m series D) to propel its bold ambitions in challenging the big five incumbent banks who have dominated the market for decades. To put it into perspective, this is easily the most an Australian start up has ever raised. On top of these rounds, Judo has even taken on additional private investment.

Judo Bank IPO

Judo went public at the start of November 2021, listing on the ASX and raising an additional $657 million, valuing the firm at around $2.5 billion whilst its share price peaked.

CEO Joseph Healy had this to say on the announcement: 

“Since day one, Judo Bank’s purpose has been clear, to be Australia’s most trusted SME business bank by bringing back the craft of SME relationship banking… Judo Bank’s IPO will mean more SMEs will have access to a relationship bank that listens, understands and boldly backs their business.”

Judo Bank Provided with an Investment-grade Credit Rating

In an unexpected move, ratings firm S&P felt Judo Bank was awarding of a full investment-grade rating in the Autumn of 2021. Rating the firm BBB, the S&P assessment both praises the bank for its initial success and highlights caution due to Judo lending within the higher risk SME market. 

2022 Financial Snapshot

Judo Bank reported a 73% growth rate in its loans portfolio over the 2022 financial year with gross loans totalling $6.1bn. The bank exceeded its expectations across a number of markers that it included in its IPO prospectus in 2021. Headline figures show:

Impressively, Judo Bank posted a $15.6m pre-tax profit in 2022 – just a little over four years from when it first launched. Very unusual for a bank and indeed a fast-growth fintech. 

In a nutshell, Australian entrepreneurs are fed up with the tight purse strings of legacy lenders. Firms like Judo Bank have liberal acceptance terms, flexible repayment structures, and more. As a result, they are experiencing exponential growth in a market starved for capital.

What Lending Solutions do Judo Bank Offer?

Judo Bank/Judo Capital offers several types of financing for SMEs. They provide standard fixed term unsecured or secured business loans, business lines of credit and equipment business loans. We summarise each product here. 

Fixed Term Business Loans

These standard term loans are flexible to a business’ cash flow and individual circumstances but will be agreed upfront. Fixed, variable or combination rates available. . These loans can also include interest-only terms – useful for businesses experiencing tight finances.

Business Line of Credit

Their line of credit is another attractive product for small business owners. Offering up to $5 million in liquidity, businesses can cover unexpected expenses without interruption to their cash flow. With no scheduled repayments (other than interest), this product can stabilise a company’s finances. It’s a variable rate product and there’s a 12 month term which is reviewed annually (to seek an update on the firm’s financial position and ensure they’re getting good use out of the facility). 

Equipment Loans

Judo bank’s equipment loan facility which assists SMEs in buying business equipment or vehicles and as usual a charge is taken over the asset. Terms up to five years and a tailored repayment frequency can be established in order to match the borrower’s cash flow.

Other lending products include a bank guarantee should a supplier or landlord require one (which sees the bank guarantee to pay the creditor should you be unable to). And a Judo home loan, which is only available to customers associated with a business lending product from Judo.

To summarise, as of 2022, Judo Capital offers a range of unsecured/secured loans between $250,000 and $10,000,000. In addition to flexible repayment, the time frames of these products are also attractive. With terms as long as five years, payments are less burdensome on borrowers, allowing companies to focus on growth.

Judo Bank Term Deposit

Not a type of finance but we felt a quick mention of the award-winning Judo Bank term deposit would be relevant. Hold money with Judo for a fixed period and receive a rate of return which exceeds that offered by ING, NAB, Commonwealth Bank and Westpac on a comparable product. Note, however, Judo’s investment grade is below that of these banks so one would naturally expect a higher rate of return. The funds held in a Judo Bank term deposit can also be used as security on a bank guarantee from Judo

Judo Bank – Loan Pricing

Judo Bank is transparent about how it sources its liquidity. It operates on the wholesale markets (i.e. it borrows from other banks in order to lend to customers) and depending on the rate it is able to achieve it then sets its own Judo Market Base Rate. This means the Judo Market Base Rate is largely calculated by what’s known as the Bank Bill Swap Bid Rate (the rate at which banks borrow money from one another on a short-term basis) which, in turn, is of course largely influenced by the Australian Reserve Bank Rate (the rate banks are charged to borrow money from the central bank).

Historical Judo Market Base Rates are as follows:

For perspective, the RBA base rate was 2.35% on the first of October whilst the Judo Market Base Rate was 3.02%. Judo will then price each business loan differently, depending on a number of factors which will include things like (but not limited to) the loan term, the amount borrowed and the calculated risk.

Judo Bank – Early Repayment Costs

As Per Judo Bank’s website, they are also very transparent about how early repayment costs are calculated should you decide to repay a loan sooner than the originally agreed date. It is mentioned that if there is a differential in interest rates from the time in which money was borrowed until the point in which an early repayment has occurred, early repayment fees shall apply. If, for example, the wholesale interest rate on the day of the early repayment is less than the wholesale interest rate was at the start of the fixed interest rate period, then a loss would be incurred by Judo and  the customer would have to pay for the difference. 

In their example, a customer agrees to borrow $500,000 in an interest-only facility at a rate of 5.45% for five years and Judo’s underlying wholesale interest rate was 2.95%. The customer then wants to repay the facility after one year, at which point the wholesale interest rate is 2%. Judo then calculates the early repayment costs by using the following formula: Principal remaining * Wholesale Interest rate differential (per period) ^ Number of remaining repayments. In this example, as it’s an interest-only facility, the principal remains at $500,000 after one year, the wholesale interest rate differential is 0.95% and 12 months of the repayment period have surpassed, with 48 months remaining. Based on these circumstances, the calculation would then be as follows… $500,000 * (0.95%/12) ^ 48 = $19,357.80 total.

Judo Bank Reviews by Clients

As a newcomer to the alternative lending space, reviews of Judo Bank were hard to come by in its first couple of years in operation.However, as of October 2022, there are now over 500 reviews of Judo bank on Product Reviews Australia. That is still a small number compared to the the leading online SME lender Prospa (which has amassed over 7,000TrustPilot Reviews), but it’s still a reasonable sample size that can provide insight as to whether customers actually enjoy working with Judo bank. The main hindrace is that the majority of reviews left for Judo Bank online relate to term deposits and not Judo’s SME lending products.

With an average score of 4.4 / 5 across 591 reviews, it means 85%+ of all reviews are positive.

Advantages

A number of reviews specifically highlight the good customer care that Judo has demonstrated together with its transparency in rates and fees. The sign-up process is also praised as being generally hassle-free and fast.

Disadvantages

The negative reviews point to the online system occasionally dropping out and long hold times when contacting customer support.

Judo Bank Review Analysis

A significant amount of Judo Bank reviews are left by customers of the Judo Bank Term Deposit. This makes it difficult to spot any major trends or themes which are specific to Judo’s lending products. Therefore, the reviews are more indicative of Judo’s overall level of customer service. In this sense, the reviews are mixed. A large majority of Judo Bank customers report a seamless experience with the online platform and easy access to the customer service team. On the contrary, there is still a fair amount of disgruntled customers that report very long wait times on the phone, which is surprising, as it’s issues like these which were the whole reason Judo was founded.

It’s worth pointing out however, that all customers of Judo’s lending products are appointed with a dedicated relationship manager but customers of the Term Deposit product are not. This largely explains the reasoning behind the negative feedback and also indicates that Judo loan customers should not experience any of the primary concerns which were highlighted with the customer service team.

Judo Bank  Loan Compatibility

• Startup: Yes, but they assess loans on a case-by-case basis with relationship bankers.
• Bad credit: Yes, but they assess loans on a case-by-case basis with relationship bankers, unlike some other bad credit business loans in Australia.
• Sole trader: Yes. Judo Bank does lend to Sole Traders but they should be aware of the minimum lending amounts.
• Established business: Yes. With a track record, Judo Capital will gladly lend to established SMEs and this is their primary focus when considering lending starts at $250,000.

Judo Bank Review Summary

Judo Bank is shaking up the Australian banking market for small business owners. With a focus on all loan clients being assigned relationship managers and an ethos of relationship-based lending decisions, they obviously believe SMEs are not getting their fair share of representation from the incumbent big five banks. The majority of customers are thoroughly enjoying the experience of working with Judo Bank, and those who are disgruntled highlight issues which don’t apply to Judo loan customers. 

However, looking at the minimum lending amounts there is still certain criteria which suggests these solutions are for mid-size companies and larger SMEs. Lending is primarily on a secured basis and only begins at $250,000. For many SMEs this is simply not what their business requires, so if you are considering an unsecured loan or loan amount below $250,000 then Judo Bank is not the right fit for you. With a relationship based approach there’s less focus on speed too – there’s no online application or guarantees to fund clients on the same day. That’s not to say Judo Bank are not doing a great job at what they do, customers just have to be aware if it matches their business requirements.

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