In further evidence of the growing attraction between FinTech and traditional finance firms, Biz2Credit has inked a strategic alliance wherein Australian Finance Group will provide small business loans through the Biz2Credit platform.
The move represents a continued push internationally by Biz2Credit, and in an interview with PYMNTS, CEO Rohit Arora explained that the alliance helps the FinTech firm “continue to execute on our growth strategy, which is to push further into Anglo-Saxon areas,” where the platform represents a natural extension beyond the U.S. and where, thus far, the company has helped firms obtain as much as $1.4 billion in loans.
The fact remains, said the CEO, that “SMEs in that country, and elsewhere, face the same problems, which include access to credit and the long processes that come with filling out paperwork.” For small businesses especially, said the executive, the move to digital processes has been a notable laggard, classified as “poor digitalization.”
“The challenge is in the workflow,” said Arora. In this case, the initial foray focuses on commercial vehicle loans. That’s an important conduit for SMBs to get equipment in place, to open up shop and also to keep supply chains humming, getting goods from business to business.
The advantage also accrues to banks looking to establish a presence with lending to small businesses, in loan amounts that would be less than the half million-dollar mark. By lowering lending costs through digital processes, the loans themselves become more profitable, and analytics help gauge credit risk effectively. Cash flow analysis through the Biz2Credit platform as applicants apply online, alongside the ability to conduct the loan process across mobile devices, means that loans can be done around the clock and in the field.
Arora told PYMNTS that loans extended into the commercial vehicle space would typically carry interest rates in the 4–12 percent range, with relatively lower rates charged versus alternative online lenders because banks carry a lower cost of capital, and loan sizes, given the commercial nature of the loans, would average between $80,000 and $100,000.
Looking beyond the partnership with Australian Finance, Arora said that other near-term rollouts will embrace Canada and the United Kingdom.