Seven fintechs have now become compliant signatories of the AFIA’s Code of Lending Practice and will be rolling out a new tool to help small businesses understand SME loan products.
The Australian Finance Industry Association (AFIA) has announced that Lumi has become the seventh signatory to sign the association’s Code of Lending Practice for online small business lenders.
The seven “code compliant” fintech signatories are now: Capify, GetCapital, Lumi, Moula, OnDeck, Prospa and Spotcap.
The signatories will also be given a new accreditation symbol, or ‘trustmark’, to show that they are compliant with the code.
“We are pleased to have reached another milestone in online lending transparency and disclosure for small businesses, with seven balance sheet lenders now fully compliant with the Online Small Business Lenders’ Code of Lending Practice,” the Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, said.
“We commend their commitment to becoming compliant within six months of signing up to the code. We would now like to see all fintechs that offer online small business loans to sign up to this code, to provide an alternative finance solution for small businesses,” she continued.
AFIA CEO Helen Gordon added: “Together, in a little over 10 months, we have developed and implemented a code and a governance structure designed to be able to be replicated and leveraged for other small business finance products or providers.”
“The code ensures small businesses have access to an alternative working capital product that will drive innovation and growth in a sector fundamental to the overall health of Australia’s economy,” she said.
“AFIA members are proud to play a key role in financing Australia’s future”.
SMART Box tool
As well as announcing the seventh signatory to the code, the AFIA has also announced that the seven lenders will now have the ability to share a new pricing disclosure tool to their customers.
Developed by the Innovative Lending Platform Association (ILPA) for the US, Canadian and Australian small business lending markets, the SMART Box tool aims to help SMEs make “smarter, responsible, and more informed financing decisions”.
The new SMART Box tool provides small business owners with comparative pricing from various online lenders, and detailing “clear and concise” outlines of loan summaries before they are accepted and evidence of code-compliance and fairness for their loans.
The summaries will include the loan amount, disbursement amount, total repayment amount and term.
OnDeck, one of three founding members of the ILPA which designed and launched the SMART Box in the US in October 2016, welcomed the launch of the new SMART Box tool.
Noah Breslow, CEO of the US-listed On Deck Capital, Inc, said: “Having the trust of your customers is fundamental to a company’s reputation, and transparency builds that trust.
“Our experience in helping develop the SMART Box with ILPA has given us first-hand insights into the information small businesses want and need to make smart financing decisions.”
Beau Bertoli, co-founder and joint CEO of Prospa, also welcomed the launch of the tool, stating: “Prospa has consistently been committed to helping lift transparency across the industry and transform the way small business owners experience finance. Our focus has always been on putting customers at the heart of our business and doing the right thing by them.
“The introduction of SMART Box to all of our loans will make it even easier for small businesses across Australia to review and compare unsecured small business loans to support their business.
“We continue to encourage other small business lenders in the industry to engage with AFIA and sign up to the Code of Lending Practice.”
[Related: SME lenders sign new Code of Lending Practice]