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NAB provides $50m funding facility to SME lender

NAB has set up a $50 million special purpose vehicle with SME lender GetCapital to help fund more loans to small business.

Speaking to Mortgage Business, the CEO of GetCapital, Jamie Osborn, said that the company has had a “long relationship” with NAB and has been in discussions with the major bank over the past 18 months regarding a range of projects. He confirmed that the bank has agreed to set up a special purpose vehicle (SPV) to act like a senior debt facility to help GetCapital “lend more money to SMEs in Australia”. 

Mr Osborn said: “What you will see is that it gives us greater capacity to lend more money to more SMEs, which is obviously a good thing.

“It also helps us to bring down the cost of our capital so we can provide more cost-effective solutions to the end customer as well... This is a structure that works well for us and works well for the bank.”

Indeed, NAB executive general manager of client coverage for corporate and institutional banking, Cathryn Carver, said that NAB is committed to supporting businesses to grow. 

“NAB backs Australian businesses — not only is GetCapital a business we support directly, but through this funding facility, we’re indirectly able to support the business customers of GetCapital, too. 

“As Australia’s leading business bank, we understand what businesses need to grow.

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"We’re pleased to support GetCapital with a funding facility so it can provide innovative lending solutions to small and medium-sized business customers.”

When asked whether the SPV would result in cheaper loans for the end customer, Mr Osborn said that the company “foresaw the facility coming and had already moved on price”, highlighting that GetCapital’s equipment finance products start at 6.95 per cent and that the working capital loans are “not far off where the banks are on their secured working capital loans”. 

“This [SPV] helps us support greater volumes in that space,” Mr Osborn added. 

Further, the GetCapital CEO went on to say that he believes that bank funding could open up the SME lending space further.

Mr Osborn told Mortgage Business: “As a general rule, and you see this across lenders, until the big banks come in and support a sector, the cost of capital is just higher.

“When the bank funding comes in, the market considerably opens up for each of the players and we think that is where we are at with the SME lending space.

“We are at that tipping point where bank funding coming in — like this type of SPV — is likely to really accelerate the growth in the sector.”

He concluded: “What we are starting to see in our space is a bit of a bifurcation between the players that have scale and funding — the ones that can support a business over the long term — and those that don’t.

“If I were a borrower, I’d be looking for a lender that is transparent and open with how they price and what products they have to offer, and also looking for one that I know is going to be around in five years’ time and has the capital base and the funding to support me as a business, as I grow.” 

The SME lender is one of the first signatories of a new Code of Lending Practice that aims to standardise transparency and disclosure around their online, unsecured business loans and the use of finance brokers.

Developed with support from the Australian Finance Industry Association (AFIA), the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), thebankdoctor.org and FinTech Australia, the code pulls together the obligations of online small business lenders to promote high industry standards of service, provide a benchmark with respect to the disclosure of comparable financial information to borrowers and support compliance with legal and industry obligations.

Modelled on best practice examples and feedback from the more mature fintech markets in the US and UK, the code has therefore been brought forward as part of a “proactive move to pull the obligations of online small business lenders together into one document” and make it easier for both participants and borrowers to understand their obligations.

The six signatories to the code so far are Capify, GetCapital, Moula, OnDeck, Prospa and Spotcap.

[Related: Ombudsman calls for greater clarity on fintech loan terms]

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