How Prospa helps brokers tap into SME finance

Q. What has the appetite for finance from the SME sector been like?

I would say in the last five to six months, we have seen a shift in regarding the number of businesses that are actually putting their hand up. But we also have observed that there are more and more businesses that are coming to Prospa to finance growth.

Previously, for the last 24–35 months, we observed that businesses were under pressure, experiencing challenges, and the main use of funds was to overcome those challenges. So, we are seeing this evolution, which is a really positive sign.

Q. Why is innovation so crucial to support SMEs in today’s environment?

Speed is a key driver in SME lending as we know. And in a world where solutions are just one click away, and where funding can be the difference between overcoming a challenge or seizing an opportunity, access to capital quickly is essential, and technology is a great enabler of it.

If you think about 10 years ago in this space, business owners in need of funds had to wait several weeks until they got an outcome of their application or got a sense of what solutions were available in the market. Fast forward 10 years later, the market standard right now is 24–40 hours turnaround, and we have now actually pushed that limit even further with the introduction of Prospa IQ and our technology, where we are looking into real-time decisioning to be able to set those expectations and assess businesses.

The second point talks to the evolution of SME needs. Once, a simple loan was sufficient to serve for different customer needs, in other words, one-size-fits-all.

Today’s SMEs seek more tailored, holistic solutions that solve for very specific needs.

Q. What impact have you seen from brokers adopting Prospa IQ?

We launched the tool at the end of last year, and we started seeing more and more brokers probably throughout the last six to seven months utilising the tool.

Today, 75 per cent of all customers that we fund start their journey on IQ. And the brokers utilising IQ have nearly doubled the number of businesses they’re currently funding.

Now, this shouldn’t be a surprise at all because brokers leveraging IQ are actually several stops ahead. They can deliver accurate real-time solutions in front of their clients. The customer experience is unmatched because urgency, as I mentioned, is everything when a business needs the funds. And nothing beats providing that solution on the spot.

Q. Prospa recently doubled the amount businesses can borrow through its Business Loan Plus up to $1 million – what prompted this move?

Over the past years, we’ve seen consistent growth in the average deal size and the size of businesses that have been reaching out to Prospa through our broker partners.

This growth in average deal size and the business type has largely been driven by new features that we introduced – for example – the five-year terms. We extended the term and offered a lower repayment and increased the servicing amount.

The move into the $1 million loan reflects this evolution, catering for more established businesses, more bankable types of customers who are turning to alternative lending.

These businesses typically will have an annual revenue over $5 million, and they’re seeking funding as well to capitalise on larger growth opportunities. We are seeing that the use of funds predominantly relates to growth opportunities, which is awesome and fantastic to see right now.

We do believe that this segment remains underserved. And while private lenders and private lending do exist, these often cater for more short-term and property-backed solutions.

At Prospa, we believe in assessing businesses on their own credit strength, not their property value. So, this is allowing us to offer larger amounts over longer terms.

Q. And how can brokers take advantage of Prospa’s end-of-year deal?

We are well into the end of year. What that means is that demand for our product offering increases, grows, and we see businesses that are or rather slowing down during the festive season, and they will need some cash support to go through this period.

We will also see some businesses that actually are ramping up, and they will need access to cash in order to finance throughout the whole end of year.

It’s a great opportunity to educate your self-employed business owners and customers.

And, also for that reason, because it’s a busy period, we again have introduced our end-of-year promotion for our broker partners. That’s a boost in commission.

So, we’ll be offering a boost in commission of 1 per cent across the board all the way up to 31 December to all brokers that trust their clients to us.