Prospa squares up against banks, expands SME loan

The new solutions are a new business transaction account with a built-in overdraft facility of up to $100,000, an expanded small-business loan offering up to $500,000 secured lending to larger small businesses and a line of credit facility to be rolled out in New Zealand.

All three products will be available through the broker channel by early 2022.

The new business account has been touted as an all-in-one solution, including an overdraft facility to enable small and medium enterprise (SME) owners to access credit and cover temporary cash shortfalls.

It will also hold an integrated suite of tools, available from the one platform to enable transactions, payments and expense management.

Co-founder and chief revenue officer Beau Bertoli told The Adviser Prospa had wanted to “connect all the dots” for small-business owners, to enable them to manage their cash flow in one place, rather than juggle between banks, lenders, and payment and invoicing providers.

“When we think about the competitive landscape, there’s not anyone really in Australia that’s doing this. What we’re proposing really is an Australian first and in face around the world there are very few examples of platforms that have done this successfully,” Mr Bertoli said.

During the investor presentation, Prospa chief executive and co-founder Greg Moshal stated that many of the new solutions will challenge the other banking products customers will use, across transaction accounts and payments products.

But the lender does not believe it needs to become a bank to compete.

“We have built this solution along with multiple partners,” Mr Moshal said.

“…And at this point, we believe we can give an experience that rivals the banking experience and improves on the banking experience without having to become an ADI [authorised deposit-taking institution] as well.”

Crossing over into invoicing and payments solutions, and software will present an opportunity for the lender to diversify its revenue sources, Mr Bertoli added.

It is also expected to create opportunities to cross-sell credit products.

The business transaction account is tipped to launch around the third quarter of the 2022 financial year – in the three months to March.

Meanwhile the two other new loan solutions fall under Prospa’s strategy to capture additional market share, with it aiming to satisfy underserved small businesses. 

From Monday (25 October), the Prospa Plus Small Business Loan will offer up to $500,000 for a maximum term of three years, extending from its previous limit of $300,000 over two years.

The product will also feature reduced rates as well as a dedicated account manager throughout the life of the loan.

Mr Bertoli told The Adviser the product reshaping had been based on broker feedback and a review of its pricing and rates.

Around 75 per cent of customers had come to Prospa via its intermediary partners, according to the co-founder, who called the channel an “important part” of the business.

“When we’re building and designing new propositions, we always think about our partners, they’re involved in the discovery, they’re involved in conversation, they really help us uncover where are the opportunities, where can we grow our business into,” he said.

“We’ve got a really good balance here of continually enhancing that value proposition, our partners were telling us they have customers who require more money for longer term, they want to get their repayment down and of course, there’s always a desire to have better priced products in market. So we’ve been able to deliver on all three of those areas.”

Prospa has offered no repayments for the first eight weeks for all new or refinanced small-business loans until 31 December – marketing the move as a boost for small businesses to take advantage of the economic rebound.

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