As any small business which has needed extra funding in the form of a loan may already know, wading through the jargon and costs associated with a small business loan can be seriously headache-inducing.
That could well be in the process of changing though, with a number of online business lenders having recently become compliant with a new code aimed at making the lending process more transparent for businesses.
Seven Australian online lenders, including Capify, GetCapital, Lumi, Moula, OnDeck, Prospa and Spotcap, are now participating fully with the Australian Finance Industry Association (AFIA)’s Code of Lending Practice.
Originally launched in June 2018, the voluntary code was designed to make the online lending experience clearer for Australia’s three million small businesses.
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Businesses owners now have access to more standardised interest rate, fee and payment information from participating lenders, while they will also be able to make use of the AFIA’s SMART Box tool which provides more detailed explanations about loan rates and key features.
According to the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, the adoption of the code is an important step in promoting online lenders as alternatives in the small businesses lending space.
“We are pleased to have reached another milestone in online lending transparency and disclosure for small businesses, with seven balance sheet lenders now fully compliant with the Online Small Business Lenders’ Code of Lending Practice,” she said.
“We commend their commitment to becoming compliant within six months of signing up to the Code. We would now like to see all fintechs that offer online small business loans to sign up to this Code, to provide an alternative finance solution for small businesses.”
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