Prospa gets primed to support SMEs over year-end

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Brokers have a huge opportunity to gain a foothold in commercial lending as SMEs’ seasonal demand for finance peaks over the summer

CHRISTMAS IS is just around the corner. If you are nine years old, that means penning a letter to Santa outlining the many reasons why you should be showered with toys on 25 December. But if you are a small business owner, it means getting stock ready for the seasonal rush, ensuring payroll is smooth over the holiday period, organising extra cash for relief workers, and perhaps starting to plan projects for 2023. “With end of year fast approaching, we should expect to see an increase in demand from retailers and other businesses wanting to purchase additional stock to cover Christmas, Boxing Day and New Year demand,” says Paul Evans, regional manager for Vic/Tas, SA/NT and WA at non-bank lender Prospa. Brokers have the ideal opening to expand their commercial loan offerings just as demand is about to surge.

Prospa is Australia’s number one small business online lending specialist providing market-leading capital products and solutions to help Aussie small businesses grow and prosper. Established in 2018, Prospa ensures applications are simple and funds can be accessed within 24 hours. Its cash flow products and services allow small businesses to grow and take advantage of opportunities to boost their businesses or help them pay for goods and services.

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PROPORTION OF SMEs RATING THEIR BUSINESS HEALTH AS 'GOOD' OR 'VERY GOOD'

70%

“With end of year fast approaching, we should expect to see an increase in demand for retailers and other businesses wanting to purchase additional stock”

Paul Evans, Prospa

A season to be jolly (well prepared) YouGov research commissioned by Prospa shows that in August approximately 70% of small businesses rated the health of their business as ‘good’ or ‘very good’, with one in four expecting to access funding over the next 12 months.

Prospa’s own research indicates that small businesses are showing they are well equipped to navigate any challenges, and the non-bank is continuing to experience high demand for funds. Evans admits that the overall direction of the economy is not clear. “The current operating environment still provides a lot of uncertainty with increasing interest rates and rising inflation,” he says. But Prospa sees broad-based demand as the end-of-year period is traditionally a time of heavy credit use, with cash flow challenges due to regular workers taking holidays, and staff shortages. “We see this particularly impacting the retail and e-commerce, hospitality, transport and logistics, travel and tourism industries,” says Evans.

“Having access to funds early, such as Prospa’s products, allows small businesses to confidently manage cash flow with fixed repayments,” Evans says. Counterintuitively, a shaky economy may be all the more reason for brokers to take another look at adding a commercial lending arrow to their quiver. “As residential lending ebbs and flows, diversifying into commercial lending offers brokers a valuable opportunity to ensure they’re equipped to support small business clients and continue growing their business through the tough operating environment,” says Evans. Prospa’s key funding products include a business loan for funding up to $500,000, and a line of credit of up to $150,000 to cater for flexible, ongoing access to credit. Going to a regular bank is likely to be time-consuming, with extra hurdles to be jumped regarding lending criteria. More small businesses with truncated paperwork over the last few years due to COVID disruptions are now falling through the cracks at mainstream lenders. Prospa applications require minimal paperwork, so those who have suffered disruptions don’t need to miss out.

“Having access to funds early, such as Prospa’s products, allows small businesses to confidently manage cash flow with fixed repayments”

Paul Evans, Prospa

“[At Prospa] business owners can access funding in as little as 24 hours to enable them to make decisions fast and seize opportunities with confidence,” says Evans. Regular client offers – such as Prospa’s current end-of-year offer of no repayments for the first eight weeks on business loans during that period – also help support businesses by providing some breathing space while they put the funds to use. Re-examining the Christmas card list The best commercial customers often turn out to be clients who are already in the broker’s customer database. Many

residential borrowers talking to their brokers about refinancing are also small business owners who would prefer to deal with someone they know rather than showing up hat in hand somewhere new to discuss a commercial loan. “Start asking your self-employed or business owner clients what challenges or opportunities they anticipate and whether they need access to capital to support them,” says Evans. “Assume every business owner needs capital, and just consider who you think could benefit from access to this.” Evans says commercial lending is not as difficult as many people think, especially once a broker has a few notches on their belt. “The key is to learn just enough about commercial products and how small businesses can benefit from them,” he says. To support brokers through the process, Prospa has dedicated BDMs who can educate and guide applications through to settlement. The non-bank has a suite of flexible products designed for the needs of small businesses, and provides direct access to credit teams, as well as a business team that's on hand to discuss scenarios and options. “We also offer extensive white-label marketing tools and resources to help brokers generate leads and grow their businesses,” says Evans. Brokers can simply refer their small business clients to work directly with Prospa, or they can be involved in the whole process – it’s up to them. “We ensure the process is hassle-free, simple and flexible,” says Evans.

Source: YouGov research commissioned by Prospa, August 2022

*YouGov research commissioned by Prospa, 3–12 August 2022, with 504 participants

^For business loans settled between 24 October 2022 and 31 December 2022. Terms and conditions apply

Some of these industries may not have operated at full capacity for several seasons, or could be new businesses, and will be wanting to make the most of the summer. Other businesses will be thinking further ahead. “Those in construction or anyone who is impacted by supply chain issues may be looking to purchase stock up front,” Evans says. Firms will be anticipating demand for jobs three to six months out and keeping a wary eye on geopolitical events. By having access to funding now to purchase stock for work in the first few months of 2023, they are able solidify their pipeline and commit to opportunities ahead of rivals, instead of missing out.

“There is currently a massive opportunity for brokers looking to diversify into commercial lending with Prospa now and support more small businesses,” says Evans. “By adapting to the opportunity, brokers also create stickier relationships with their clients as they can support them through multiple scenarios.”

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Month-on-month change in business turnover, retail trade

Source: ABS Monthly Business Turnover Indicator

Sept

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

June

July

Aug

2016/17

2017/18

2018/19

2019/20

2020/21

10%

20%

30%

-30%

-20%

-10%

A season to be jolly (well prepared) YouGov research commissioned by Prospa* shows that in August approximately 70% of small businesses rated the health of their business as ‘good’ or ‘very good’, with one in four expecting to access funding over the next 12 months. According to CreditWatch, the strongest SME sectors are currently healthcare and social assistance, agriculture, forestry and fishing, and manufacturing. These industries are likely to continue to see high demand, even in the event of lower overall consumer demand, given the essential nature of the goods and services they produce. Prospa’s own research indicates that small businesses are showing they are well equipped to navigate any challenges, and the non-bank is continuing to experience high demand for funds.

According to CreditWatch, the strongest SME sectors are currently healthcare and social assistance, agriculture, forestry and fishing, and manufacturing. These industries are likely to continue to see high demand, even in the event of lower overall consumer demand, given the essential nature of the goods and services they produce. Prospa’s own research indicates that small businesses are showing they are well equipped to navigate any challenges, and the non-bank is continuing to experience high demand for funds.

Evans admits that the overall direction of the economy is not clear. “The current operating environment still provides a lot of uncertainty with increasing interest rates and rising inflation,” he says. But Prospa sees broad-based demand as the end-of-year period is traditionally a time of heavy credit use, with cash flow challenges due to regular workers taking holidays, and staff shortages. “We see this particularly impacting the retail and e-commerce, hospitality, transport and logistics, travel and tourism industries,” says Evans. Some of these industries may not have operated at full capacity for several seasons, or could be new businesses, and will be wanting to make the most of the summer. Other businesses will be thinking further ahead. “Those in construction or anyone who is impacted by supply chain issues may be looking to purchase stock up front,” Evans says. Firms will be anticipating demand for jobs three to six months out and keeping a wary eye on geopolitical events. By having access to funding now to purchase stock for work in the first few months of 2023, they are able solidify their pipeline and commit to opportunities ahead of rivals instead of missing out. Evans recommends starting conversations early with potential borrowers to make sure they are well equipped to tackle the challenges. To help SMEs take on these growth opportunities now and prepare for 2023, Prospa offers up to eight weeks of no repayments on business loans.^

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^For business loans settled between 24 October 2022 and 31 December 2022. Terms and conditions apply

*YouGov research commissioned by Prospa, 3–12 August 2022, with 504 participants

Evans recommends starting conversations early with potential borrowers to make sure they are well equipped to tackle the challenges. To help SMEs take on these growth opportunities now and prepare for 2023, Prospa offers up to eight weeks of no repayments on business loans.

^For business loans settled between 24 October 2022 and 31 December 2022. Terms and conditions apply

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*YouGov research commissioned by Prospa, 3–12 August 2022, with 504 participants

^For business loans settled between 24 October 2022 and 31 December 2022. Terms and conditions apply

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10%

20%

30%

-30%

-20%

-10%

Sept

Oct

Nov

Dec

Jan

Feb

Mar

Apr

May

June

July

Aug

2016/17

2017/18

2018/19

2019/20

2020/21

Month-on-month change in business turnover, retail trade

Source: ABS Monthly Business Turnover Indicator