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Access to credit critical to small business survival: Ombudsman

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has welcomed the federal government’s decision to provide some non-bank lenders with access to the COVID-19 SME Guarantee Scheme.

The scheme provides eligible small businesses with access to up to $250,000 in unsecured funding, including a six-month repayment holiday with interest accrued to be amortised over the course of the loan.

“The inclusion of five non-bank lenders in the scheme, means there is a greater chance of credit flowing to viable small businesses that need it,” Ms Carnell says.

“Non-bank lenders are accustomed to lending unsecured and getting funding to SMEs quickly.

“It is important the selected Fintechs pass on the lower rates for loans under this scheme to small businesses, as they are backed by a 50% government guarantee.

“Essentially this means the government is taking on half of the risk of the loan and that needs to be reflected in loan pricing. This is something my office will be monitoring closely.

“We certainly support the inclusion in the loan guarantee scheme of fintech firms on the proviso they are signed up to the Fintech Code of Conduct, as this commits them to provide a process for complaints-handling and transparency around loan rates.

“It’s encouraging that four of the chosen non-bank lenders are signatories to the Code – Prospa, Moula, Get Capital and On Deck Capital.”