The small business lender is targeting larger SMEs in response to increased demand for growth finance options.
Non-bank lender Prospa has doubled the amount that businesses can borrow through its Business Loan Plus to $1 million.
Small and medium-sized enterprises (SMEs) can now secure finance starting at an annual percentage rate (APR) of 11.95 per cent, with loan terms of up to five years.
Loans can be backed against first or second mortgages and at up to a 100 per cent loan-to-value ratio (LVR), inclusive of all Prospa loans.
Prospa is accepting property desktop valuations up to $4 million in metro areas and $2 million in regional Australia.
The SME lender also teased a seasonal promotional offer, but did not disclose further details.
Speaking to The Adviser, Prospa co-founder and chief revenue officer, Beau Bertoli, said the expanded property-backed loans were a reaction to feedback from partners and customers.
“They really wanted to see us do it on larger loans. And as businesses grow and as our brand becomes more established, we’re finding larger and larger businesses are looking for solutions where the banks just can’t really support their needs,” he said.
“It was really market feedback and a combination that we’ve got the products, the propositions, the funding and the timing was right for us.”
Bertoli added that Prospa was targeting larger businesses with the expanded lending limit.
“It’s definitely going to be businesses with larger turnovers. So your business is probably in that 5 million to 20 million [dollar] a year revenue category that would benefit from this,” Bertoli said.
“If you think about businesses that are undertaking growth initiatives like acquisitions or expansions, that’s going to be a really common use case. And I think for those businesses that are growing really nicely, this is definitely the sort of product that enables them to take advantage of those growth opportunities as they come up.”
Bertoli also highlighted the advantages that non-bank lenders like Prospa could offer compared to traditional banks.
“It’s important to note that this is a product where we will consider up to 100 per cent LVR. So we will allow a business owner to access the full value of equity that sits within their properties,” he said.
“And that’s a real advantage to brokers because, unlike banks, who are really strict and tight on a lot of those, particularly LVRs, will be able to give brokers and their customers a lot more flexibility.
“Brokers will now have a product in their suite that is different to what they’ve currently got and will allow them to really offer to their customers a real game-changing solution.”
Momentum builds in SME lending
When asked about trends he was seeing across SME borrowing, Bertoli told The Adviser that demand for finance was on the rise.
“Demand is definitely picking up. I think, as the economy sort of bottomed out over the last six to 12 months, interest rate cuts started to come through, and that’s starting to stir a little bit more economic activity. We’re certainly seeing a trend of heightened demand from businesses,” he said.
“We’re also seeing that the highest quality businesses out of the last couple of years have survived, and they’re now turning their attention to growth opportunities.
“And that’s quite different to six or 12 months ago, where a lot of business owners were in survival mode and they were really not focused on growth initiatives. So that’s been a big change and I think that we’re in the early stages of that economic momentum.”
Bertoli added that brokers stood to capitalise on the trend, with recent research from Lumi showing that more than half of SMEs use brokers to access a wider range of funding options.
“It’s something for brokers to be very aware of. They should be engaging with their customers to have those conversations about: What are your plans for the next 12 months? Where are you taking your business? What growth initiatives are you thinking of and how are you going to finance those growth initiatives?” Bertoli said.
Reflecting on other industry trends, Bertoli noted that brokers were increasingly turning to tech to improve service and gain a competitive edge.
“The way that brokers and their customers are starting to adopt technology is starting to really take off,” Bertoli said.
“Obviously, AI is a really emerging and very powerful technology that’s coming through. And I think the brokerage firms that we see that are adopting these technologies are really [the ones] moving forward.
“And it’s their customers who are getting the best service.”
[Related: More SMEs using brokers to secure finance]
