Non-bank business lenders join SME Loan Guarantee Scheme
Small businesses impacted by the coronavirus may soon find it even easier to secure extra finance, following the government’s latest decision to involve non-bank lenders in its SME Loan Guarantee Scheme.
Under the SME Loan Guarantee Scheme, the federal government will guarantee half of all new three-year unsecured business loans of up to $250,000 issued by eligible lenders, between 14 April and 30 September. Borrowers will receive an initial six month repayment holiday, with interest capitalised.
Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, said the move should help small businesses get their hands on working capital loans quicker than they would with the big four banks.
“The inclusion of five non-bank lenders in the scheme, means there is a greater chance of credit flowing to viable small businesses that need it,” Carnell said.
“Non-bank lenders are accustomed to lending unsecured and getting funding to SMEs quickly.”
The first wave of fintechs chosen for the scheme are: Prospa, OnDeck, Moula, GetCapital, and Liberty Financial.
Carnell expressed support for the selected fintechs who have also signed up to the Fintech Code of Conduct, “as this commits them to provide a process of complaints-handling and transparency around loan rates”.
“It’s encouraging that four of the chosen non-bank lenders are signatories to the Code - Prospa, Moula, Get Capital and On Deck Capital,” she said.
From May 1, Spotcap will also be offering unsecured business loans under the scheme.
RELATED ARTICLE: Guide to Australia’s coronavirus financial support for small businesses
“It’s important the selected fintechs pass on the lower rates for loans under this scheme to small businesses, as they are backed by a 50% government guarantee,” Carnell said.
“Essentially this means the government is taking on half of the risk of the loan and that needs to be reflected in loan pricing.”
Prospa has already said it will adopt such an approach. CEO Greg Moshal told the Australian Financial Review that although the fintech would keep its risk-based pricing model, interest rates would be reduced to take into account the government guarantee.
“Obviously there is increased risk in this environment… but we’ve been able to decrease our pricing as a result of the scheme.”
Under the scheme, Prospa will be allocated up to $223 million to assist with its small business lending.
RELATED ARTICLE: ABS data reveals extent of COVID-19 financial hit to Australian businesses
Facing financial hardship amid COVID-19? For more support options, check out our guide on the government and various banks’ coronavirus financial relief packages for small businesses.
Or if you’re in need of a working capital boost to keep your business afloat, get started with some of the business loans below.
Business loans 2020 - rates updated daily
Unsecured Business Loan
A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.
Interest Rate
Upfront Fee
Funding speed
from 9%-Within same dayUnsecured Business Loan
A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.
- Interest Rate
- from 9%
- Upfront Fee
- -
- Ongoing Fees
- 2.5% establishment fee of the disbursed amount.
- Late payment fee
- $50.00
- Transaction fee
- $0.00
- Early repayment penalty
- $0.00
- Other fees
- -
- Loan type
- Loan
- Security type
- Unsecured
- Minimum loan amount
- $5,000
- Maximum loan amount
- $300,000
- Minimum loan term
- 3 months
- Maximum loan term
- 4 years
- Repayment frequency
- Weekly
- Repayment types
- Principal & Interest
- Minimum trading period
- 6 months
- Minimum annual turnover
- $60,000
- Application speed
- within 24 hours
- Approval speed
- 2 hours
- Funding speed
- Within same day
- Extra repayments allowed
- yes
- Redraw allowed
- yes
- Other benefits
- Early payout options and early repayment discounts are available. Principal-only payout available after 6 months.
- Other restrictions
- Loans above $300,000 must be secured by property.
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 $12M.
Interest Rate
Upfront Fee
Funding speed
0% for the first 60 days, then rates starting from 6%On ApplicationInstant on approvalInvoice 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 $12M.
- Interest Rate
- 0% for the first 60 days, then rates starting from 6%
- Upfront Fee
- On Application
- Ongoing Fees
- Ongoing service fees apply. Amount is calculated as a percentage of invoices processed.
- Late payment fee
- $0.00
- Transaction fee
- $0.00
- Early repayment penalty
- -
- Other fees
- -
- Loan type
- Line of Credit
- Security type
- Secured
- Minimum loan amount
- $100,000
- Maximum loan amount
- $10,000,000
- Minimum loan term
- 1 months
- Maximum loan term
- -
- Repayment frequency
- -
- Repayment types
- n/a
- Minimum trading period
- 1 year
- Minimum annual turnover
- $1,000,000
- Application speed
- 2 Minutes
- Approval speed
- 24 Hours
- Funding speed
- Instant on approval
- Extra repayments allowed
- -
- Redraw allowed
- -
- Other benefits
- Complimentary Trade Finance facility available subject to approval. Access to the Octet Supply Chain Platform.
- Other restrictions
- Up to 85% value of unpaid invoices available.
Prospa Plus Business Loan
Prospa uses risk-based pricing to determine your interest rate. They look at factors including your industry, years in business, cash flow, creditworthiness and the overall financial health of your business.
Interest Rate
Upfront Fee
Funding speed
Interest rates vary based on risk.3.5%from 24 hoursProspa Plus Business Loan
Prospa uses risk-based pricing to determine your interest rate. They look at factors including your industry, years in business, cash flow, creditworthiness and the overall financial health of your business.
- Interest Rate
- Interest rates vary based on risk.
- Upfront Fee
- 3.5%
- Ongoing Fees
- $0.00
- Late payment fee
- $0.00
- Transaction fee
- -
- Early repayment penalty
- $0.00
- Other fees
- -
- Loan type
- Loan
- Security type
- Secured
- Minimum loan amount
- $150,000
- Maximum loan amount
- $500,000
- Minimum loan term
- 3 months
- Maximum loan term
- 3 years
- Repayment frequency
- Weekly
- Repayment types
- Principal & Interest
- Minimum trading period
- 3 years
- Minimum annual turnover
- $1,000,000
- Application speed
- 10 Minutes
- Approval speed
- Same-day approval
- Funding speed
- from 24 hours
- Extra repayments allowed
- yes
- Redraw allowed
- no
- Other benefits
- -
- Other restrictions
- -
Boost Business Loan - powered by Business Fuel
Get secured or unsecured business funding for up to $250K. For loan terms of 6 months to 2 years. No application or account keeping fees to pay. Minimum loan amount is $10,000. Get approval in 24 hours. Loans over $100,000 require security. Minimum annual turnover of $120K.
Interest Rate
Upfront Fee
Funding speed
from 14.00% p.a.Details on applicationFrom 24 hoursBoost Business Loan - powered by Business Fuel
Get secured or unsecured business funding for up to $250K. For loan terms of 6 months to 2 years. No application or account keeping fees to pay. Minimum loan amount is $10,000. Get approval in 24 hours. Loans over $100,000 require security. Minimum annual turnover of $120K.
- Interest Rate
- from 14.00% p.a.
- Upfront Fee
- Details on application
- Ongoing Fees
- $0
- Late payment fee
- -
- Transaction fee
- -
- Early repayment penalty
- -
- Other fees
- -
- Loan type
- Loan
- Security type
- Secured or Unsecured
- Minimum loan amount
- $10,000
- Maximum loan amount
- $500,000
- Minimum loan term
- 3 months
- Maximum loan term
- 3 years
- Repayment frequency
- Weekly
- Repayment types
- -
- Minimum trading period
- 1 year
- Minimum annual turnover
- $120,000
- Application speed
- From 24 hours
- Approval speed
- From 24 hours
- Funding speed
- From 24 hours
- Extra repayments allowed
- -
- Redraw allowed
- -
- Other benefits
- All industries supported.
- Other restrictions
- Loans up to $100K: No upfront collateral required Loans between $100K to $200K: Borrower must be a property owner Loans over $200K: Borrower must be a property owner, and the loan will be secured
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