Prospa becomes first online small business lender to complete review of loan terms with ASIC
Prospa is the first online small business lender to have undertaken a full review of its loan terms after consultation with ASIC.
Prospa has agreed to certain recommendations from ASIC in relation to removing or amending some of its contract terms. Some of these terms have, historically, not been relied upon, and other terms were amended to clarify or reflect existing policies. Prospa notes that the amendments agreed with ASIC do not have any material impact on the company financially or operationally.
Prospa’s COO Ben Lamb said: “We’re always looking for ways to improve finance outcomes for small business owners. As the first non-bank lender to complete its review, we believe these changes are industry-leading.
“We specialise in lending to small businesses and we know any changes we can make to ensure access to finance is simple and easy to understand are going to help our customers save precious time so they can focus on growing their businesses.”
Prospa’s General Counsel, Nicole Johnschwager, said the small business lender has worked with the wider industry, ASIC and customers to address queries raised by ASIC in its industry-wide review of loan contracts.
“These changes have been made as part of Prospa’s commitment to helping lift transparency across the industry.
“Prospa looks forward to continuing to improve financial inclusion for small business owners. This is an evolving area of regulation and we will work with industry peers and stakeholders to support this important and growing industry.
“We call on other small business lenders in the industry to engage with ASIC and complete their own reviews and to subscribe to the Code of Lending Practice if they haven’t already.”
Prospa is also a signatory to the Online Small Business Lenders Code of Practice (“the Code”) recently published by the Australian Finance Industry Association (AFIA).
The Code, supported by a standardised pricing disclosure tool, will make it easy for small business owners to review and compare unsecured small business loans provided by Code signatories. And it will also support lenders by centralising obligations to various regulatory bodies, supporting industry-wide compliance.
The demand for online, unsecured small business lending continues to grow. Small businesses are a major contributor to the economy, with 2.2 million small businesses in Australia employing 44 per cent of Australia’s private sector workforce and generating 35 per cent of Australia’s GDP. These small businesses have been underserved by the traditional banking system, and are increasingly turning to online, unsecured lending to support their growth.
Prospa has a history of industry leadership and innovation, having funded its first loan in 2012, implemented same day loan approval capability in 2013 and implemented the first Australian small business loan securitisation in 2015.
