Initially, the government only included traditional lenders in the scheme
Small business lending specialist Prospa has successfully lent its total government allocation under the Business Finance Guarantee Scheme (BFGS) to small- and medium-sized enterprises (SMEs) in New Zealand via its Back to Business loans.
Initially, the government only included traditional lenders in the BFGS. However, Prospa and other alternative lenders lobbied for the inclusion of non-traditional lenders in the scheme. As a result, the government added Prospa and other alternative lenders to the scheme in April to give SMEs access to credit for cashflow, capital assets, and projects related to the impacts of the COVID-19 pandemic before the BFGS concluded at the end of June.
During the scheme period, Prospa attracted a higher market segment of customers, with loans over $100,000 to $300,000. A more versatile range of advisers also referred businesses to the small business lending specialist, with a 14% increase in the number of transacting brokers and a 51% increase in broker applications.
“We couldn’t have asked for a better outcome, especially to lend the full allocation within such a short timeframe. Our adviser partners contributed significantly to the outcome,” said Adrienne Begbie, the managing director of Prospa NZ.
“We also understand small business better than anyone and know from research conducted with YouGov that more than half of SME owners have missed out on opportunities to grow their business because they couldn’t access funding when they needed it. We don’t want that to be the case.
“Recommendations from trusted advisers are vital to ensure missed opportunities can be avoided. Advisers also have a key role in educating and assisting their small business clients about the options that are available to them, beyond just traditional lenders.”
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In its recent quarterly results, Prospa saw record-breaking loan originations – with a 72.1% increase on the previous quarter, showing the growing need and appetite for higher loan amounts.
Due to its success with the BFGS, Prospa has retained its Back to Business Loan product (no longer offered in connection with the BFGS) to continue supporting Kiwi small businesses, with some modifications. The product provides SMEs with continued access to larger capital ($100,000 to $300,000) to invest in business growth opportunities.
“We’re excited to continue partnering with our adviser network to help small businesses recover and thrive through our Back to Business loans. For any adviser considering small business lending, I’d encourage them to reach out to us,” Begbie said.
