The CEO of SME fintech Prospa has paid tribute to the Australian Government’s handling of the pandemic, claiming that economic measures such as JobKeeper were responsible for saving the SME sector.
Greg Moshal, CEO and Co-Founder and Prospa, spoke at Intersekt, the annual conference of the Australian fintech industry, and explained how fintech lenders such as Prospa had seen the ripple effects of government measures throughout the economy.
“JobSeeker was absolutely vital: people just needed that support,” he told the conference. “JobKeeper was the activity that saved the economy. We saw this with our customers: you’ve got to remember that small businesses are 97% of businesses. You’re talking about 46% of GDP and two thirds of employment. That’s where the jobs are and that’s where the GDP is coming from. “
“JobKeeper was vital because SMEs don’t have pent-up reserve or large balance sheets that they can leverage when things turn around. People are looking at week to month planning. What started happening was that they just didn’t have those buffers, and the government moved very quickly.”
“Look at the unemployment rate and how it sparked up: I had friends with small businesses that were unfortunately letting go 10, 20, 30 even 50% of their staff within a week or two. I think it (JobKeeper) was absolutely fantastic. From an economic basis, JobKeeper was an absolute game changer and I couldn’t speak more highly of it.”
Moshal also spoke about the SME guarantee and how it had helped fintechs to lend throughout the pandemic.
“The guarantee scheme was helpful,” he said. “It started fairly early: the government was offering support where they would cover 50% of losses. We took a different approach to the rest of the world. In the UK, it was 80%, in the US, it was a different programme that gave 100% cover and used banking and fintech to distribute capital.”
“The way the government did it here was positive, and I think they expected a fair bit of risk to still be taken by the lenders. As we have watched the programme evolve, it has been directed more into something that will support the banking sector rather than the fintech sector, which is a little bit unfortunate.”
“But the fact that the government was offering something like that, from Prospa’s point of view, was that we were lucky to be beneficiaries of the guarantee scheme and we put out a great amount of capital to our SME lenders which was helpful. We also got funding, which we were able to pass onto our customers. The guarantee was a little bit softer than the rest of the world, but when you look at the recovery, it’s been a positive.”