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The Institute of Public Accountants has welcomed ASIC’s latest survey of the marketplace lending industry, showing a double figure jump in the uptake of loans by small businesses.
The corporate regulator’s second survey in the alternative lending space for the 2016-17 financial year showed $300 million in loans written to consumers and SMEs, nearly double the figure for 2015-16.
The survey also found a total of 7,768 investors and 18,746 borrowers as at 30 June 2017, more than double the figure in the previous financial year.
IPA senior tax adviser Tony Greco said the growing marketplace lending industry was a good sign for small businesses that previously struggled to get a hold of loans due to the restrictive lending practices of traditional banks.
“Once upon a time it was concentrated by the banks and the banks dictated the rules and now with these new players, there's a lot more on offer and they've all got various conditions attached to their loans but in the main, it's become easier if you don’t have hard assets to gravitate to some of these new providers who have got a bit more flexible lending terms,” said Mr Greco.
“If the banks won't lend then absolutely there are other lenders who are prepared to step into that void.
“They will lend on the basis of cash flow of the business as opposed to tangible assets so there's a fair but more competitive market space - there's a lot of fintechs now that have moved in into that sector so obviously the marketplace is washed with all different providers.”
Mr Greco also said that while accountants alert clients on different options on the table, they need to ensure small business owners are aware of the various terms and conditions attached to loans.
“The rates that these provider charge and the conditions attached to the loan is always things that borrowers have to be wary of,” added Mr Greco.
“The cost associated to lending, not just the interest rates but any additional costs for defaults and what happens if those repayments aren't met.
“At the end of the day, there are conditions attached to the loan that must be met and repayment dates and it's a case of making sure that the business is in a sound position to adhere to the loan terms and it's just 101 basics.”