Moula accelerates access to capital

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In a changing economy, faster access to funding means less worry and more time for both SMEs and brokers to get on with the job of running their businesses

MOULA'S HEAD of sales, Sam Sfeir, explains how the business loan specialist is working to make access to finance easier for SMEs through tech initiatives such as its intelligent decisioning engine, HECTOR, and how this will support broker businesses as customers rise to meet the economic challenges ahead. What opportunities does small business lending provide for brokers and their clients in the current environment? The current economic conditions, with rising inflation and interest rates and supply chain

Since 2013, Moula has been creating the future of business finance. In the past, getting a business loan meant going through weeks of paperwork, hassle and hurdles. With our intelligent decisioning engine you can get your clients funded in record time. We are passionate about using technology to simplify small business finance and backing good businesses. Moula is a better way to help your clients grow their businesses.

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“Through automation, we’re delivering credit decisions within two hours for most loan applications. This means our broker partners and customers can focus on running their businesses”

Sam Sfeir, Moula

shortages, have elevated the need for small businesses to access cash flow solutions to enable them to better manage their own cash positions. With our expertise, Moula is ideally placed to help our brokers and customers successfully navigate through these challenging times. What's your point of difference with competitors? Our core philosophy is a customer-first approach underpinned by speed, flexibility and transparency. We’re dedicated to providing a business finance solution that’s easy to use and motivated by delivering positive customer outcomes. Our loan applications take approximately 10 minutes to complete, and we're able to approve and fund applications within 24 hours without requiring additional security. We don't charge fees or penalties for the early repayment of loans, providing SME borrowers with the flexibility to match their funding needs to their business cycles.

We understand the value that our broker partners provide to SMEs, and we remain focused on providing the tools and support that they need to best serve their clients. We have an embedded workshop process involving senior members of the sales and credit teams, aimed at addressing the many unique requirements of SME borrowers. Moula’s rates are expressed as an annual percentage rate (APR), providing brokers and borrowers with a clearer view of the true cost of a loan. What difference has HECTOR made since launch? HECTOR, our intelligent decisioning engine, is the backbone of credit and underwriting at Moula. HECTOR uses artificial intelligence and machine learning to continually refine our data-driven approach to credit assessment and aid in making faster decisions. With HECTOR, we are now able to help

businesses 96% faster. Through automation, we're delivering credit decisions within two hours for most loan applications. This means our broker partners and customers can focus on running their businesses. HECTOR also enables more informed risk-based pricing so that we’re better able to offer competitive loan terms. How has the system evolved? HECTOR is continuously learning with new data sets and the refinement of assumptions to ensure it is optimised for real-time credit assessment. The last three years have provided us with an unparalleled insight into how SMEs perform under difficult economic conditions. The associated learnings in relation to borrower behaviours and the financial performance within various sectors have informed our algorithm and enhanced our ability to assess creditworthiness. What's going on at the organisation? Are there any new products or initiatives? We are continually refining our core product offering to ensure it's meeting the working capital requirements of small businesses. In recent months we have expanded our BDM team, bringing on additional team members in Victoria and Queensland to meet increased demand from brokers. We have also expanded our guidelines, including improved pricing for SMEs in the hospitality/food and beverage segment.

We have a wealth of data and analytics that can be used to help borrowers manage their cash flow through the life of the loan, providing an exciting opportunity for both us and our broker partners to provide greater support to clients. We're continually assessing and adopting market best practices and technologies. Improving our cybersecurity and risk posture is one area of continued focus. How do you support brokers in this area? We have an experienced and enthusiastic team of BDMs that are active in the marketplace, attending industry events, hosting broker events, and always available to help our broker partners support their customers. A key benefit of our model is the involvement of senior credit team members working with our BDMs and brokers to explore creative solutions to assist borrowers. Our Partner Portal hosts underwriting and referral tools, shareable content, a business loan calculator, and a pricing tool that brokers can use to download a sample repayment schedule. In addition, we distribute weekly 'Good Business Deal' emails to our network, highlighting opportunities and insights based on recent funding decisions. These initiatives were launched to assist brokers looking to diversify into commercial finance, and for experienced commercial brokers to promote their services to their client bases.

“Every business cycle does present opportunities for growth, and it’s important that businesses are able to take advantage of those opportunities when they present themselves with timely access to funding”

Sam Sfeir, Moula

Where do you think the best opportunities lie in the business loan space now? The utility of our business loan product facilitates access to funding for businesses at different stages in their life cycle, to assist with growth or to ease the burden associated with cash flow pinch points. Our key point of difference is that borrowers can repay their loans at any time without additional cost – so borrowers with a short-term funding requirement can enter into a two- or three-year loan to reduce their scheduled repayments and then repay the loan once their cash positions have improved. In recent months, we have also helped to refinance borrowers with competing high-cost, line-of-credit products, yielding an immediate cash flow benefit for borrowers via a lower rate.

Where do you see credit demand rising or falling? How does this affect lending prospects? We're seeing demand for credit rising across all industries as we emerge from the pandemic and the impacts of sustained lockdowns. The short-term outlook is for a moderation of overall economic growth as the central bank looks to mitigate rising inflation. The prospect of lower house prices combined with the increased costs of inputs in the housing sector are cause for concern, though we remain upbeat about the ancillary building services sector. We're also seeing an increase in professional-services borrowers attracted by our ability to assess risk, and price accordingly. How do you see the SME space changing? What factors impact your thinking? The current economic environment represents a range of challenges that we haven’t experienced in generations. The post-COVID financial impact coupled with rising interest rates, labour shortages, and supply and demand mismatch are all factors combining to create cash flow management challenges for many businesses. However, every business cycle does present opportunities for growth, and it's important that businesses are able to take advantage of those opportunities when they present themselves with timely access to funding.

1,200

$BN

1,150

1,100

1,050

$1,018

$1,088

$1,017

$1,098

$1,032

$1,118

$1,028

$1,129

$1,027

$1,142

$1,161

$1,039

$1,048

$1,166

$1,052

$1,178

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Source: RBA Bank Lending Classified by Sector – D5 data, Sep 2022

2021

2022

YoY change

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+7.0%

+7.9%

+8.3%

+9.9%

+11.2%

+11.8%

+11.3%

+12.1%

Year-on-year growth in commercial lending

Average time to complete a loan application

10 minutes

Source: Moula

Moula funding proposition

Average time to credit decision with HECTOR

2 hours

(1.5 hours for applications under $100,000)

Time to approval

24 hours or less

Fees/penalties for early repayment

None

What tech-related initiatives adopted by the organisation, if any, are you most excited about? Tech is at the heart of our business, but not every client is comfortable with transacting purely online. Whilst our systems seamlessly integrate with clients’ bank and/or accounting data, allowing us to rapidly assess their cash flow, there are still borrowers who prefer to provide us with bank statements rather than link data. We have recently implemented a tech solution that allows our credit team to apply the power of HECTOR to these manual applications, providing a swift turnaround with the same level of credit rigour.

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