Australia has been a hot target for alternative lenders as of late. While the nation’s alt-lending startup Kikka is pioneering domestic players in the market thanks to a partnership with Kabbage, U.S. player OnDeck has chosen the country as its first market outside of North America after raising $23 million to open doors down under.
Now, another foreign alternative lender is slated to enter the Australian market. Europe-based Spotcap reportedly launched lending operations in the nation on Tuesday (May 26), according to reports. The company is offering loans between $1,000 and $10,000 for small business owners, offering a five-minute application process and a less-than 24-hour assessment for SME owners to obtain a decision.
Spotcap first began its lending business in Spain, said reports, then spread to the Netherlands earlier this year. The company sources its loans from other lenders, and is said to be in discussions with Australian banks to do the same there, though banks won’t be the only source for financing.
“Australia has a very high penetration of online banking and we believe there is significant unmet demand for small business loans,” said managing director of Spotcap’s Australia operations Lachlan Heussler in an interview with Brisbane Times. “We think a lot of the business we lend to will be banked but some will also be unbanked.”
While online alternative financers have been flocking to the country to fill the SME lending gap, Heussler said that Spotcap will look to stand out from the competition by offering free lines of credit to SME applicants for the first three months. The company said that its interest rates will range between 1 and 1.5 percent a month on average, lower than some of its competitors in the market.
According to industry experts, late payments are becoming a growing problem in Australia and forcing SMEs to access cash flow from other sources, while traditional banks find SME lending too risky. While the need for working capital among SMEs is there, experts warn that alternative lenders will need to weigh the higher risk associated with mall business loans in order to be profitable.