It’s been a long time coming, but New Zealand SMEs looking for business loans are at last starting to see options that don’t involve filling out a 20-page bank form, waiting weeks and putting their home on the line.

The buzzword is ‘fintech’ – technology companies using digital information to make people’s financial life easier.

This month Prospa, one of Australia’s biggest fintechs lending to SMEs, formally launched in New Zealand.  The company is offering loans of $5,000 to $150,000 and makes its decision using a borrower’s digital data to gauge whether its cashflow is enough to keep on top of repayments.  It aims to make a decision within 24 hours and doesn’t need a house or other assets as security.

Prospa is not the only fintech looking at New Zealand SME lending – and it’s far from winning the strange name award.  Another Aussie fintech, Waddle, is offering pre-approved funds based on a company’s invoice data from its accounting software.  And Germany-based Spotcap offers loans up to $250,000 with a 24-hour decision.

Co-founder Greg Moshal says Prospa has lent A$1 billion to Australian SMEs since the company was founded seven years ago, and uses companies’ existing digital information.  “We connect with various datasets.  For example, we might bring in financial information from Xero, a company’s bank statements, or their main transactional account.

MYOB, Xero’s main competitor in the online accounting software space, has teamed up with Aussie loan specialist OnDeck to provide SME lending, including in New Zealand.

And while not a trendy fintech with a wacky name, New Zealand’s Heartland Bank offers unsecured lending up to $75,000 through its digital Open for Business (O4B) platform.  The company’s 2019 first-half report showed lending through O4B grew 56.2 percent in the six months to the end of December to $115.4 million.

Prospa’s other co-founder, Beau Bertolli, expects New Zealand SMEs to be borrowing $4 billion-$5 billion within 3-4 years and hopes his company will have a chunk of that.  Bertolli says he and fellow founder Moshal founded Prospa because they had six small businesses between them and found it tough to get money from the bank.

“It is atrocious.  It takes a long time; you might have a 10-20 page application form, and you have to get information from your accountant.  Then you might wait 2-8 weeks before your application is assessed, and often the answer is no.  If they say yes, they need security from the family home.

“You shouldn’t have to tie up a $700,000 home for a $30,000 loan.”

Meanwhile, home-grown fintechs are also set to enter the New Zealand SME finance market, according to Kiwibank’s Anand Ranchord.  Ranchord, Kiwibank lead for the programme, says within the next six months Kiwi fintechs will start to emerge.  Momentum could start building within 12-18 months.

“Using connections to real-time data is a digital transformation for banking.  It’s going to make it easier to make credit decisions in close to real time and it will be cheaper and easier for SMEs.”