Fintechs, established non-bank lenders and regional banks all look to be in line for a share of a A$2 billion “Australian Business Securitisation Fund” foreshadowed in an announcement by the treasurer, Josh Frydenberg, yesterday.
The Australian Office of Financial Management will be the catalyst for this splurge, not that there are many loans suitably packaged for the government’s funding agency to invest in at the moment.
Taking their cue from a succession of media interviews by Frydenberg, analysts are counting fashionable fintech lenders as among those in the running for a subsidy from the taxpayer.
Leo Tyndall, CEO of Marketlend, an established “peer to peer” fintech, sees mixed blessings in the government’s dalliance with SME funding.
“There’s no need for someone to come in with $2 billion,” Tyndall said, from the vantage of a financier that’s funded SME loans in the order of $150 million over four years of operation, thanks to its own a network of domestic investors and funding lines with US banks as a backstop.
Still, Tyndall said, “it’s a good idea for two reasons. It will give the market a very clear idea of how other lenders perform over time. It’s not the easiest to see other people’s books.
“It will also make it more difficult for major lenders to compete.”
Neil Slonim, principal of consultants The Bank Doctor said “the securitisation option is a lower risk and lower cost option that is more politically palatable than the government going back into the lending business,” as the small business ombudsman, Kate Carnell, has suggested.
“But will it improve access to finance? For the fintechs to access this fund, firstly they need to write a certain volume of loans.
“I don’t know what that volume is, but most of the fintech SME lenders except perhaps for the larger ones like Prospa and Spotcap are still not writing large volumes.
“And how will it work given that most fintech loans are for very short terms.”
Bendigo and Adelaide Bank and Bank of Queensland and the likes of Liberty Financial may be the immediate beneficiaries of the Frydenberg fund.