Prospa has said brokers are “invaluable” to its business and SMEs, with its co-founder and co-CEO saying he would be “very surprised” if the final royal commission report reduces capital to the SME market.
On Tuesday (29 January), the small business lender released new research into the economic impact of its lending to small business in Australia.
According to the economic impact assessment, undertaken by Prospa in partnership with RFi Group and the Centre for International Economics (CIE), the small business lender has lent almost $920 million to more than 18,000 Australian business since 2012.
The research then modelled the flow-on effect of Prospa’s lending to understand how it is impacting small business and the economy in general.
The findings were arrived at after asking Prospa customers how much lower their revenue would be without their Prospa loan, and extrapolating that out on a national level.
According to the research, the lender has therefore contributed $3.65 billion to nominal Australian GDP and resulted in more than 52,000 annual full-time positions being maintained over the past five years.
Moreover, the lender’s research suggested that for every $1 million that Prospa loans, there is a $4 million increase in gross domestic product (GDP) and 57 full-time positions are maintained.
Speaking of the findings, Prospa co-founder and joint CEO Greg Moshal said: “This report reinforces how important it is for small businesses to be able to access funding, the significant role of Prospa in providing that funding, and the flow-on impact on the wider Australian economy.
“Brokers are an invaluable part of Prospa and enable us to support as many small businesses as we can. In providing their small business clients with fast, simple access to finance, they are directly contributing not just to their customers’ revenue and jobs, but to the wider Australian economy.”
Speaking to The Adviser, Mr Moshal noted that more than 70 per cent of the lender’s business were written by intermediary partners and that brokers are a “significant part” of that.
“We do view brokers as a significant partner and they can take a lot of comfort from the fact that the work they are doing with Prospa is helping reach and support a whole lot more small businesses than we could do on our own, and it is having a large economic impact on both communities and the broader economy,” he said.
Noting that small businesses have traditionally turned to brokers for their finance needs, Mr Moshal said he believed that it would “continue to be so” as SMEs want and need a “trusted adviser who can help them demonstrate what is the best solution for them”.
As such, Mr Moshal said that he would be surprised if the upcoming final report from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (set to be publicly released on Monday) would recommend anything that would detrimentally impact small business’ access to finance.
Looking at the impact of the royal commission on the SME space, Mr Moshal told The Adviser that while he does not have a “crystal ball”, he noted that last year’s interim report “showed there really wasn’t an appetite for government or small business community for restricting small business lending any further”.
He continued: “I think we should be trying to increase the capital that is given to small businesses and that’s where we see this report helping to reinforce that.
“When we look at our research, for every $1 million that Prospa has provided, that is an extra $4 million in incremental GDP, it’s an extra 57 jobs.
“We’d be very surprised if any outcomes from the royal commission look to reduce the capital that was going to that area of the economy, because it’s such a positive area for the job creation, for GDP and the strengthening of communities.”
He concluded: “In terms of what is coming up next, we can’t speak to brokers as a whole, but our hope and our belief is that the final report will not see any other restrictions and we don’t think there will be any other unintended consequences into the small business lending category.”
Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.
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