Westpac will create new loan agreements for a selection of core lending products using language that is easy to understand by early 2018. The changes will include reducing the word count of loan documents by 25% and creating shortened ‘plain English’ agreements for loans where the borrower’s total exposure to the bank is below $3 million.
Westpac will also offer electronic delivery and signing for a selection of core lending products, when it starts the rollout of a new online service next month. Business customers with total borrowings up to $3 million will be able to receive, upload and sign their loan documents online, removing the need for manual processing, and speeding up the time to settlement.
Additionally, protections under business contracts will be strengthened to make them more favourable for small business customers, in consultation with the Australian Securities and Investments Commission and the Small Business and Family Enterprise Ombudsman.
The changes will apply to customers who have entered into, renewed or varied a business finance contract of $1,000,000 or less since 12 November 2016.
Westpac will start to deliver the new loan agreements during December 2017, and will progressively add loan products, across all brands, in 2018.
David Lindberg, Chief Executive of the Business Bank, said Westpac is focusing on both addressing and anticipating the needs of small businesses. “These are important changes that will make banking simpler for our customers, and we are optimistic about the growth of the small business sector.
“Small businesses currently make up almost 96 per cent of all Australian businesses, and in a services economy where large businesses are progressively outsourcing their innovation to SMEs, this is where Australia will see growth.
“For the third year in a row, we anticipate small business lending in our portfolio to grow three times faster than larger businesses, and we currently approve the vast majority (93%) of small loan applications. We currently lend $50 billion to SMEs and have a further $30bn in conditionally approved limits to support SME growth.
“We are constantly investing in, and developing our people, products and services to help make businesses stronger, and we will continue to lend [responsibly/within our regulatory guidelines] to provide the capital businesses need to grow and participate in the global economy,” Mr Lindberg said.
As part of its ongoing commitment to making Australian businesses stronger, Westpac continues to work with peers, its regulators and the industry to make changes that support the Australian Small Business and Family Enterprise Ombudsman’s recommendations.
The changes announced today will complement existing automated and digital services that make banking more straightforward for businesses, including LOLA (Live Online Lending Application), which customers used to access $2.5 billion in business loans in FY17. Westpac is also investing in payments solutions and self-service options such as Optimist, Genie, and Westpac Live for Business, as well as strategic partnerships to help businesses such as FlareHR, Surgical Partners, and Stone & Chalk.