Prospa lends full allocation to support Kiwi small businesses

The Business Finance Guarantee Scheme (BFGS) was an immediate temporary measure launched in March 2020 to help lenders provide credit to viable businesses by encouraging funders to lend where otherwise they may not, by the Government taking up to 80% of the loan’s default risk. Borrowers were still liable and must pay back the debt, with interest, in the usual way.

The BFGS was initially only available via traditional lenders. However, Prospa was a key player in lobbying for the inclusion of non-banks, along with the Financial Services Federation, and was added to the scheme in April. This allowed more SMEs to access credit for cashflow, capital assets and projects related to, responding to or recovering from, the impacts of COVID-19 before the BFGS concluded at the end of June 2021.

Its inclusion in the BFGS enabled Prospa to increase awareness and strengthen trust of alternative lenders, while also attracting a higher market segment of customers with loans of $100-300,000. 

Prospa’s recent quarterly results saw record-breaking loan originations, with a 72.1 percent increase on the previous quarter.   

Due to its success, 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. This allows SMEs continued access to larger amounts of capital from $100-300,000 to invest in business growth opportunities.

Adrienne Begbie, Managing Director of Prospa NZ, said, ‘We couldn’t have asked for a better outcome, especially to lend the full allocation within such a short time frame. We believe it’s because we understand small business better than anyone. Research conducted with YouGov highlights 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. 

‘Awareness around alternative lenders is still growing, so it’s great that the government saw merit in including lenders like us to the BFGS. We’ve helped more than 11,900 Kiwi small business owners to date and are so proud to have supported this community to get back on their feet and feel empowered for the future again. 

‘We’re excited to continue to service this new market segment through our continued Back to Business loans. As the economy begins to bounce back from the challenges of Covid-19, it’s critical that we support local businesses and encourage them to thrive,’ concludes Begbie.

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