Fintech lending guide to aid small business

The guide, Borrowing from fintech lenders, is a joint project between the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) and SME finance expert Neil Slonim from theBankDoctor.org.

The release of the guide is a follow-up to the Code of Lending Practice released in July, with online lenders Capify, GetCapital, Moula, OnDeck, Propsa and Spotcap as the first signatories.

The code was modelled on best practice examples and feedback from the US and UK and is expected to be fully operational and enforceable by the end of 2018.

Loans from fintech lenders are typically for between 3 to 12 months and the majority of finance being below $100,000.

ASBFEO Kate Carnell said the guide is “another step closer to transparency and disclosure for the fintech industry”.

“It provides answers to the questions asked by most potential borrowers: What is a fintech lender and how is it different to a bank? What products do they offer? How much can I borrow and what will that cost me?” Ms Carnell said.

“It also explains lending terminology and provides information on the Online Code of Lending Practice.”

Mr Slonim said the two biggest concerns owners have about borrowing from banks is that they generally require property as security for a loan and they can take a long time to make decisions.

“Fintech lenders on the other hand can provide very quick access to finance without the borrower having to put up property security. Small business owners understand how banks work, but the same cannot be said about fintech lenders,” Mr Slonim said.

“Quick access and no requirement for property security are attractive benefits, but borrowing from a fintech can be expensive and it can be difficult to work out which fintech product and provider is best suited to your business.

“This independent guide explains the key issues around borrowing from a fintech lender and will enable small business owners to make more informed decisions about whether borrowing from a fintech is a good option.”