NAB provides $50m funding facility to SME lender
(11 July 2018 - Australia) NAB has set up a A$50 million special purpose vehicle with SME lender GetCapital to help fund more loans to small business.
GetCapital has a long relationship with NAB and has been in discussions with the major bank over since 2016 regarding a range of projects. GetCapital CEO Jamie Osborn confirmed that the bank has agreed to set up a special purpose vehicle to act like a senior debt facility to help GetCapital lend more money to SMEs in Australia. GetCapital is one of the first signatories of a new Code of Lending Practice that aims to standardise transparency and disclosure around online unsecured business loans and the use of finance brokers.
Mr Osborn highlighted that one of the issues with SME finance is the difficulty in underwriting loans but that new initiatives such as comprehensive credit reporting (CCR) could help in this arena. “These are not homogenous entities like you would find on the consumer side. While it is actually fairly straightforward to do a consumer lend, when you are looking at stuff that isn’t backed by property and you are trying to analyse a business, that puts them in a very very different category from an underwriting and data analytics point of view. 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.”
“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. 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”
“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. We’re pleased to support GetCapital with a funding facility so it can provide innovative lending solutions to small and medium-sized business customers” stated Cathryn Carver, NAB Executive General Manager of client coverage for corporate and institutional banking.