“This is another step closer to transparency and disclosure for the fintech industry; an alternative finance solution for SMEs,” Ombudsman Kate Carnell said.
“Borrowing from fintech lenders is a joint project between ASBFEO and independent SME finance expert, Neil Slonim, from theBankDoctor.org. It provides answers to the questions asked by most potential borrowers: What is a fintech lender and how is it different to a bank? What products do they offer? How much can I borrow and what will that cost me?” Ms Carnell said. “It also explains lending terminology and provides information on the Online Code of Lending Practice.”
Slonim says the two biggest concerns small-business owners have about borrowing from banks is that they generally require property as security for a loan and they can take a long time to make decisions.
“Fintech lenders on the other hand can provide very quick access to finance without the borrower having to put up property security. Small business owners understand how banks work, but the same cannot be said about fintech lenders,” Slonim said. “Quick access and no requirement for property security are attractive benefits, but borrowing from a fintech can be expensive and it can be difficult to work out which fintech product and provider is best suited to your business.
“This independent guide explains the key issues around borrowing from a fintech lender and will enable small business owners make more informed decisions about whether borrowing from a fintech is a good option,” he added.
The Ombudsman points out that SME lending presents a huge opportunity for the fintech industry. However, to build trust with the SME sector, they must show leadership on transparency, disclosure and abide by the Online Code of Lending Practice.
“Borrowing from fintech lenders will provide SME borrowers with the information they need to deal with fintechs and make a well-informed decision,” Ms Carnell said.