Business lender Moula has announced an additional $250 million would be made available to fund Australia’s small businesses as it vyes to compete directly with traditional banking institutions.
Together with the funding commitment, the lender also revealed it would offer pricing starting from 15.95% (APR), a move unprecedented in the online unsecured business loan market.
In addition, Moula is extending its loan terms from 24 months to 36 months and increasing the amount that can be borrowed from $250,000 to $500,000. These updates aim to provide business owners more flexibility when it comes to accessing capital, and less reason to rely on banks.
Commenting on the announcement, Moula CEO, Aris Allegos said, “Injecting a quarter-of-a billion dollars into Australia’s businesses, and making our financing terms more flexible will ensure that hard-working business owners aren’t locked out of accessing funding, and are able to seize growth opportunities with confidence.”
“Until now, online business lenders have competed with banks on speed, ease of application and customer service. However, competition based on pricing has been largely absent. With our new pricing and ongoing commitment to transparency, we’re now able to provide business owners with another option which is not only faster and easier than a bank, but also more affordable,” Allegos continued.
“Transparency is key too – we don’t have any hidden fees or penalties should a customer choose to pay early. When we quote our interest rate, it’s one simple rate, and nothing else. That was a radical move we made when we founded Moula it’s a principle we’ve stuck to, and we’re still the only ones doing it.”
Taking the banks head on
Moula’s funding injection comes at a time when banks are tightening much-needed funds for business. The Reserve Bank of Australia recently found that more than one-fifth of businesses reported that they found it difficult to access finance. According to Digital Finance Analytics’ 2017 SME Survey, unsecured business loan applicants now face a 74% rejection rate, up from the previous year, where businesses had a 67% likelihood of being rejected by traditional lenders.
“Moula has emerged as a strong and legitimate alternative to dealing with mainstream banking,” Allegos said, adding: “Fundamentally, Moula believes that business financing shouldn’t be difficult, time-consuming or expensive. The platform we’ve built analyses a business’ data, to make the approval process fast and simple.”
“Our technology isn’t the only ingredient in the business: we’ve built a team of real people who take the time to listen to each business’ unique circumstances to determine how we can help. We’re able to do that as we’re not wasting time manually processing paperwork. That’s the beauty of the platform we’ve built.”
Business owner Bek Mcmillan, who owns retail store Gourmet Living in Templestowe, Victoria, stocking regional produce, used Moula to fund extra inventory. “My experience with Moula was really simple, it was a really quick process. I had the funds within 48 hours. After starting the year with a little bit of a cash flow gap, I really needed some funds to increase the inventory so I could start 2019 with a store full of amazing stock. Moula helped me do that.”
Allegos explained that Moula’s announcement follows the recommendations handed down from the Hayne Royal Commission. “A banking system focused on customer outcomes and characterised by transparency is critical in servicing the needs of the consumer. Post Hayne, we’ll start to see better pricing terms and product experiences, which is great news for business owners and consumers,” Allegos said.
Over the past five years, Moula has grown to service a broader segment of the market to include not just small business, but also larger and more established businesses who find Moula able to offer more flexibility and better service. “From August 2014 to August 2018, our average loan amount more than doubled, which is a reflection of us moving to serve larger, more established businesses in addition to small businesses who are at the core of our market,” says Allegos.