Prospa's three-step plan to support SME brokers and their clients

Non-bank partners with Xero

Prospa's three-step plan to support SME brokers and their clients


By Ryan Johnson

While many of Australia's 2.5 million small business owners already face a litany of problems due to economic pressures, nearly half anticipate the bad times to continue, expecting a downturn in turnover by 2025, according to new research.

RFI Global's survey, commissioned by Prospa, unearthed some revealing trends within the SME sector – often championed as the lifeblood of the Australian economy.

More than half (53%) of SMEs surveyed are facing higher expenses. Some 42% are also worried about replacing staff.

This comes after a report from ASIC found not only a record number of insolvencies last month but an overall dip in job numbers of just 6,600, suggesting smaller firms were hit hardest.

This increasingly turbulent environment has caused 38% of SMEs to call for support.

In response, non-bank lenders such as Prospa have sought to make it easier for small business owners to get a handle on their finances.

Prospa’s plan was threefold: partner with Xero, acquire the Zip Business loan portfolio, and bolster its SME finance offerings through education and technology. 

Prospa’s plan: Partner with Xero

In terms of the most recent prong in the plan, Xero, a New Zealand-based SME accounting software firm, has been integrated into Prospa’s Business Account.

Xero provides SMEs with cash flow clarity, bringing their financial insights together in one up-to-date view, syncing transactions automatically, and eliminating the need for manual input. 

“With small businesses becoming increasingly time and resource poor, it has never been more crucial to adopt simplified backend processes and automate cumbersome admin tasks,” said Beau Bertoli (pictured above left), chief revenue officer of Prospa.

 “SMEs can gain greater peace of mind and save valuable time as transactions sync automatically, allowing business owners to manage their finances from anywhere.”  

Prospa’s plan: Acquire Zip Business loan portfolio

Secondly, Prospa acquired the Zip Business loan portfolio and developed a broader strategic partnership with Zip to help support more than 30,000 merchants with tailored business finance. 

This will allow the non-bank lender to become the preferred financing partner for Zip’s growing portfolio of merchants across Australia and New Zealand, giving them streamlined access to Prospa’s small business lending solutions to support their cash flow and other finance requirements.  

With Prospa, small businesses will be able to quickly get approval for small business loans up to three years or lines of credit, and a Prospa Business Account, suited to their needs.  

“Our partnership with Zip delivers even greater scale and access to small businesses seeking funds to grow their businesses,” said Roberto Sanz (pictured above right), general manager of sales and partnerships, Australia. 

“To cater to the evolving needs of our growing customer base, we’re continually reevaluating our credit risk settings to ensure we’re providing the right funding solutions.”

Prospa’s plan: Bolster tailored finance offerings

Lastly, Prospa improved its processes and platforms.

By closely examining the evolving financial needs of SMEs in the market, Prospa was able to develop technology that can inform the creation of new and relevant financial products in the future.

One example is Prospa's credit assessment process, which utilises a proprietary Credit Decision Engine. This engine leverages real-time data and industry insights, including risk factors, pricing models, and credit policies.

The lender said it continuously invests in improving this technology to ensure accurate assessments of small business creditworthiness.

“Through this we have expanded our policies and updated our pricing to support growth opportunity in the established small business segment – SMEs with at least two years trading and average monthly turnover of over $100,000,” Sanz said.

Essentially, the nonbank echoed the mantra of Steve Jobs: “You’ve got to start with the customer experience and work backward to the technology.”

“In addition, we continue to work closely with our partners to provide the education, tools and insights that they need to determine the right funding solution for their customers during periods of economic uncertainty,” Sanz said.

“Their relationships and deep understanding of their clients' businesses allow us to ensure that we’re providing the right funding solutions that suit their clients' needs in an increasingly challenging economic environment."

Non-banks’ unique position

While Prospa pledges to support small businesses through thick and thin, the strategy also aligns with the current trends of the non-bank sector.

“The latest RFI data suggests that awareness of non-bank lenders in Australia has remained stable over the past 12 months, with one in two small businesses aware of these lending services,” Sanz said. 

 Some 54% of SMEs also foresee the need to invest more in their businesses to maintain future cash flow amidst these challenging times.

However, as challenging conditions persist, Sanz said lenders are being forced to reevaluate their credit risk appetite, leaving many small business owners feeling like their eligibility for finances has become increasingly complex.

As a result, they’re actively seeking advice from brokers to navigate these challenges and secure the funding they need.

“In this environment, speed is paramount which is why non-bank lenders are uniquely positioned to help small businesses get access to the funding they need, when they need it,” Sanz said.

“Leading lenders, like Prospa, also provide tailored support and experience-driven advice to help brokers best serve their clients and navigate challenging market conditions."

What do you think of Prospa’s latest moves? Comment below.

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