Back to Business loans: Prospa offers a way out of crisis

2020 has been a tough year for many Aussie businesses. Three months since COVID-19 was first declared a pandemic, 47% were still reporting falls in revenue, according to Australian Bureau of Statistics (ABS) data released last month. 

But as parts of Australia begin to reopen and navigate a COVID-safe environment, the next big question is this: how can small businesses ensure cashflow issues don’t stop them from bouncing back with full force? 

For some, the answer may be the government’s Coronavirus SME Loan Guarantee Scheme. Under the first phase of this scheme, set to end 30 September 2020, the government is guaranteeing half of all three-year unsecured business loans of up to $250,000 issued by participating lenders. 

Under the second phase, running between 1 October 2020 and 30 June 2021, small to medium-sized enterprises (SMEs) can access even larger loans of up to $1 million and repay them over a longer period of five years. 

Prospa is one of the scheme’s 41 participants, alongside other non-bank lenders including GetCapital, OnDeck Capital and Spotcap. And it’s catering for the scheme and the tough climate businesses face right now with two new products: the Back to Business loan and the Back to Business Line of Credit. (Note: from 30 September onwards, these products are no longer be available.)

With both products, approved businesses can receive funds of up to $250,000 in as short as 24 hours, and they also won’t need to worry about making any loan repayments for six months. 

Prospa’s co-founder and chief revenue officer, Beau Bertoli says the focus of Back to Business is to help small businesses not just survive, but thrive for the rest of 2020. 

“Of course there are a lot of viable businesses across the country who were hit hard by restrictions and now need cash flow support, but many are now starting to get back to business and plan for the future,” he says. 

“Our funding has helped these small businesses make upgrades to meet new sanitation requirements, revamp their websites and introduce online services, and even launch digital marketing campaigns.”

“There are also businesses in essential services or particular sectors experiencing demand who want to seize growth opportunities while they can,” he adds.  

“For example, with more Australians gardening and renovating, we’ve had fertiliser and tiling businesses with months of work lined up come to us for funds for extra stock and supplies.”

Business loan vs line of credit: what’s the difference?

The short answer is: they suit different funding needs. So one option might be preferred over the other, depending on your business situation. 

For instance, the Back to Business Loan is a lump sum of $250,000 paid upfront, so it works well for one-off purchases such as bulk stock, renovations and new equipment. 

Meanwhile, the Back to Business Line of Credit is a facility that gives businesses ongoing access to funds of up to $250,000, which means it’s a better fit if what you’re looking for is a “cashflow safety net”. 

Bertoli explains that with a line of credit, “businesses can dip in when they need to and only pay interest on the funds they use, helping them manage the uncertainty around COVID restrictions and respond quickly to changing circumstances.” 

Interested in seeing how Prospa stack up against other lenders in the market? Scroll down below for a snapshot of unsecured business loans and lines of credit on offer.

Compare unsecured business loans - last updated February 27, 2021

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  • Line of Credit

    Zip Business Loans online application process can be completed in as little as five minutes, and once approved you can access the funds within 24 hours. A line of credit up to $500k that converts into a loan when you draw down.

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    2% to 3%
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  • Business Loan

    Business loans available from $5K to $300K and funding possible in 24 hours. Prospa uses risk-based pricing to determine your interest rate, which can range from 14.95% p.a. to 24.95% p.a. They look at factors including your industry, years in business, cash flow, creditworthiness and the overall financial health of your business.

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    Upfront Fee
    Funding Speed
    Interest rates vary based on risk. Rates range from 14.95% to 24.95% p.a.
    3%
    from 24 hours
    Details
  • Short Term Business Loan

    Unsecured business loans from $10,000 - $250,000, over 6 to 24 months. Online application takes only 10 minutes and you'll know if you're approved within hours. Apply now.

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    On Application
    3.00%
    from 24 Hours
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  • Invoice Finance

    Increase cashflow by unlocking the power of your receivables with Octet’s Invoice Finance solution. Receive up to 85% of your debtor’s ledger with tailored facilities ranging from $100K to $10M.

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    from 6% p.a.
    On Application
    from 24 hours
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  • Business Loan

    Fast, flexible business loans from $10,000 to $200,000. Great for businesses which have been trading for more than 6 months with a monthly turnover above $10,000.

    Interest Rate
    Upfront Fee
    Funding Speed
    On Application
    $0.00
    48 Hours
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