FinTech Australia welcomes the Federal Governments’ $2bn package aimed at reinforcing Australia’s small business lending sector. 

In an unprecedented move, the government has flagged the funding will be channelled primarily towards disruptors in this sector rather than its incumbent players. It comes amid revelations that a lack of competition in the sector has seen founders have resorted to personal loans early stage funding for their company in order to access better rates and deals. Several of such FinTech Australia’s key members, include Spotcap, Prospa, RateSetter and Moula.

“This is the biggest endorsement we’ve seen from government to date on the power of fintech to drive change,” Rebecca Schot-Guppy from FinTech Australia says. “Our members know this is a space that’s ripe for disruption, and if managed correctly will supercharge the rest of Australia’s startup and small business sector.”

“We will be looking to engage closely with the government as this policy is rolled out, and ensure it has greatest impact possible on the Fintech sector,” Members of FinTech Australia have also welcomed the news. “Prospa strongly supports this Government initiative,” Beau Bertoli, Joint CEO of small business lender Prospa said. “The Fund will deliver more affordable funding options to Australia’s small businesses at a time when their success is critical to Australia’s growth.”

“Like our customers, Prospa’s biggest challenge has been finding cost-effective funding. Raising capital has been difficult, time-consuming and expensive. This Fund will accelerate the process of attracting private capital to the unsecured small business lending space and create a diverse and competitive finance market.

Lachlan Heussler, Managing Director of Spotcap, said: “Mr Frydenberg’s proposal meets a real financial need and is a win-win for both Australian small business owners and for the alternative lending industry in Australia.

“Australia’s 2.2mn small and medium-sized businesses are the beating heart of our economy but are starved of working capital and under-served by traditional lenders who require security. “By lowering borrowing costs, the proposed fund is a good step in increasing competition between the dominant, big lenders and online, unsecured lenders, such as Spotcap.”

Alistair Lamond, Co-Founder and Director of Skippr said: “I saw this initiative be a game-changer in the UK. It enables alternative lenders to improve their credibility substantially but more importantly act as an efficient mechanism for the government to provide much needed stimulus to small.”

“Healthy access to capital is vital for SMEs, and we’re proud to have created a platform which helps us back good businesses without making them jump through hoops. The new fund is great news for Australia’s 2mn SMEs, and we look forward to learning more about it.”