New COVID-19 lending scheme for SMEs selects fintechs Moula, Prospa
The SME Guarantee Scheme will help businesses access new loans during the current crisis.
- Please note that Prospa's Back to Business Loan and Back to Business Line of Credit product offerings are set to end 30 September 2020. From 1 October, it will have only its standard products on the market. Any customer who settles their loan or line of credit before 5pm AEST 30 September will be eligible for its B2B products under the Coronavirus SME Guarantee Scheme. However, any customers looking to settle from 1 October onwards will be eligible for Prospa's standard product range only.
A government guarantee scheme which will support up to $40 billion of lending to small- and medium-sized enterprises (SMEs) now includes a number of non-bank business lenders. Fintech lenders Prospa and Moula have announced their participation in the scheme, through which the government will guarantee 50% of new loans issued by them to SMEs.
Moula CEO Aris Allegos has welcomed the opportunity to partner with the government to provide businesses with much-needed funding."The challenges facing the two million small and medium-sized businesses in this country are unprecedented. We're in this with them, so we know that providing businesses with time to ride out this period of uncertainty is absolutely essential," said Allegos.
The scheme is available to SMEs, including sole traders, with a turnover of up to $50 million. Businesses can borrow up to $250,000 from participating lenders which will be repaid over 3 years after an initial 6-month repayment holiday. All loans are unsecured.
Fintech Prospa is also participating in the scheme, having received a $224 million allocation to support businesses.
According to Greg Moshal, CEO of Prospa, it's "fantastic" to see that the government understands what SMEs need to survive.
"The more access small businesses have to working capital, the better it is for the economy," Moshal said.
According to Allegos, speed of decisioning will be critical to how Moula can serve SMEs in this quickly-changing climate. Like other non-bank business lenders, Moula uses accounting and bank transaction data to process applications and so can do this faster than traditional lenders.
"Rather than relying on a cumbersome process that may take weeks, the use of accounting and bank transaction data enables Moula to provide an answer within 24 hours," he said.
This isn't the only support being offered by the government to SMEs during the ongoing crisis caused by COVID-19. If you have business loans and have been affected by COVID-19, there is the Small Business Relief Package. This package effectively defers all of your principal and interest payments for loans up to $10 million. If you haven't been contacted by your bank about this yet, reach out to them. If you are struggling to pay staff or rent, you can find information on available support options here.
The SME Guarantee Scheme is available until 30 September 2020.