2020: A year in three parts

Lender exec breaks down where economy was pre-Covid, how it weathered the pandemic, and what to expect moving forward

2020: A year in three parts


By Madison Utley

With 2020 wrapping up, an executive at a small business lender sat down with Australian Broker to reflect on the distinct economic phases of what he dubbed a “remarkable year”.

As Prospa co-founder and chief revenue officer Beau Bertoli sees it, 2020 has been “a year of three parts”.

“There was a really strong start pre-Covid; then, from March to August, we felt the depth of the crisis.  Finally, from August, we’ve seen a steady recovery,” he said.

To underscore the strong growth commercial lending was exhibiting in the beginning of 2020, Bertoli  reminded that the lender took results out to market in February, reporting loan book growth of 46% on the same period in 2019.

“All of the signals were really strong. The economy was performing well. Cash flow finance for small businesses was booming,” said Bertoli.

However, as the COVID-19 pandemic began to gather steam around the globe, eventually coming to directly impact Australia in early to mid-2020, demand for commercial credit “fell off a cliff”.  

“Demand for commercial credit is closely correlated to how the economy is doing. When the economy is under pressure, quite often businessowners are not going to invest. They’re going to be really careful with their cash flow – and that was what we started to see, particularly in March, but also April, May, June this year,” Bertoli explained.

“When the first community shock of COVID-restrictions hit, it was like businessowners all went into their shells and parked all their decisions.”

Bertoli credits the unprecedented “coordinated national effort” carried out by state and federal governments, the banks, and a range of other players such as Prospa in helping small businesses make it through the tumultuous year; he reports the group supported around one-third of its small business customers with deferrals and other forms of relief.

“The way the government supported businesses, particularly small businesses, with JobKeeper was phenomenal. That kept so many businesses and their employees connected. It was probably the single thing that saved the economy,” he added.

Then, from August and September through to now, Bertoli has seen a “steady recovery” of small business confidence, a trend which seems to be building month on month.

“The health crisis in Australia is very much under control. Yes, we’re going to have flare ups like in South Australia, but we seem to be working a system on getting on top of them. We’re in a very different place in Australia to the European or American markets. Therefore, the economic recovery is starting to take place and small business owners are getting more confidence to invest in the future,” Bertoli said.

The Prospa exec can also see the confidence returning through the finance broker market. 

“There’s been a lot of home loan refinancing in the consumer space, but finally businesses are turning to their finance brokers saying, ‘Hey, the worst of this is behind us. I’ve got this opportunity. I need $50,000’ or whatever amount of money they need, and the finance broker market is really getting fired up again about the commercial finance space,” Bertoli explained.  

“We’re seeing that returning confidence in the volume we’re writing. We’re seeing it the volume at system level; there’s a lot more activity going on out there – and  I think it’s only going to get better as we head into next year.”

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