'Want to get it right': Fintechs prepare for lending plan launch

Fintech lenders are preparing their pitches to access the government’s business securitisation fund, although small businesses are unlikely to experience a flow-on affect until years into the future.

Non-bank lenders believe other factors, including access to more information about borrowers, could have a bigger impact on risk pricing and better deals for small businesses.

“I think having data available is bigger for us. At the end of the day, nothing beats data to get the real risk profile of our customers in place,” chief financial officer of OnDeck, Jerry Yohananov said.

OnDeck and other fintech lenders will be entering information sessions on the Australian Business Securitisation Fund this week in preparation to make investment applications.

The scheme was unveiled in November 2018 and is a funding pool to purchase parcels of small business loans from lenders, providing them with a stronger pipeline of capital to help address the costs of accessing small business finance.

It will be overseen by the Office of Financial Management Australia, which this week published a set of investment principles as a framework for how the fund will operate.

This guidelines mean the fund will look at whether a lender has good governance and a responsible approach to lending.

A launch date for the fund has still not been determined.

Office of Financial Management chief executive Rob Nicholl said it will consider applications for investment carefully and is keen not to “unnecessarily rule people out” when non-lenders apply to access the funds.

However, he said the rollout would be a multi-year process and boosting competition in lending would be a top priority.

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Source: ‘Want to get it right’: Fintechs prepare for lending plan launch