Prospa is Australia’s #1 online small business lender.
We are a founding member of the AFIA Code of Lending Practice and fully compliant with Code requirements.
This means we will keep 8 key promises to you under the Code:
It costs nothing to apply for finance with Prospa, and there is no obligation to proceed once you receive an offer. In order to be able to give you a SMART Box™ you will need to complete an application so we can provide pricing that will reflect the individual profile of your business.
The Disbursement Amount is the amount of the loan available to you that will be paid into your bank account. It may be less than the Loan Amount if a portion is used to pay off any amounts owed from a prior loan or an amount owed to a third party, or your origination fee.
When you apply, we will provide you with a Total Repayment Amount, clearly showing your total payback, or the total amount of cash out. This is the most important metric when you are calculating ROI i.e. evaluating the benefits of borrowing against the cost, or when you are comparing different product offers from different lenders.
When you apply, your pricing disclosure and rate will reflect the individual risk profile of your business.
We provide a loan summary sheet that clearly identifies the annual simple interest rate you are getting and your total interest expense. In addition, as a founding signatory to the AFIA Code of Lending Practice we have committed to provide a pricing disclosure tool with a number of other metrics to help you understand and assess the cost of your small business loan.
The annual simple interest percentage rate has been used to calculate the total amount of interest expense you will pay for use of the loan amount. The Total Interest Percentage (TIP) in the pricing disclosure tool is the interest expense expressed as a percentage of the loan amount.
The rate varies based on factors like your industry, how long you have been in business, and the health of your cash flow. For example on a $10,300 12 month loan (comprising a $10,000 disbursement and $300 origination fee) with a simple interest rate of 9.9% p.a. would have total repayment amount of $11,320.
Prospa provides a range of rates based on the risk profile of the business. If you wish to receive your individual rate from Prospa, you should call on 1300 882 867 or complete our easy online application.
This fee covers the one-off costs associated with processing and establishing your credit facility. We will clearly display this fee in our pricing disclosure.
When you take out a loan with Prospa, the only fee you will incur is an origination fee. There are no hidden fees for our business loans, and you’ll know exactly how much you need to pay and when from day one. There’s no compounding interest, no penalties for early repayment and no additional fees (as long as you make your payments on time).
APR stands for Annual Percentage Rate and can help you compare different loan products. Whereas your Total Interest Percentage applies to the full loan amount, an APR is a rate that applies to your loan’s reducing balance over time and is standardised on an annual basis regardless of your actual term. While APR can be used for comparison purposes, it is not used to calculate your interest expense.
Typically, APR is higher for short-term loans and lower for long-term loans. For example, a mortgage of $500,000 can have a low APR of 5% but a total interest percentage of 200%, meaning a total repayment of $1 million over 30 years. We recommend you consider the total repayment amount when comparing different product offers from different lenders.
When you apply we will let you know the total amount we can offer to lend your business at that point in time, and this is known as the Loan Amount. The total amount of your loan will depend on the specific circumstances of your business.
We’ll provide you with a Total Cost of Credit, which is the total amount you will pay in interest and other fees for the Loan. It assumes you pay off the loan in its entirety according to the agreed payment schedule, so it doesn’t include fees and other charges you can avoid, such as late payment fees and dishonour fees. You can refer to section 11 in Schedule 2 of your loan agreement for details of charges you can avoid.
We’ll also give you a Term expressed in months, which shows the period over which you will repay the loan. This is the period between when you receive the funds (your dispersal date) and the date of your last contractual payment. We round the Term to one decimal point because variations can occur due to variables such as day count convention and treatment of public holidays.
To help you avoid missing repayments we provide flexibility to fit in with your cash flow cycle. Your loan summary will indicate whether your agreed repayments are daily, weekly or fortnightly and the exact number of repayments you would need to make. These are automatically deducted from your nominated business account.
You can choose to repay the entire amount of your loan early at any time. There are no additional fees for early repayment and no balloon payment at the end of your loan. Once you make the final payment your balance will be $0.
If you choose to repay your entire loan early, Prospa will provide you with a discount on the remaining interest payable on your loan. The level of discount applied to your repayment amount will depend on how far you are into the loan term and, provided you are not in default, will be at least 25% of the remaining interest payable on your loan. Any outstanding late fees or default fees will not be waived and the discount will not be applied in respect of any interest payments that are in arrears.
If you wish to repay the entire balance of your loan early, you should ring Prospa on 1300 882 867 to obtain your early repayment figures and relevant payment details.
A factor rate is the proportion of the Total Repayment Amount payable in respect of each dollar borrowed, expressed as a decimal figure not a percent. Cents on the dollar is the total amount of interest paid per dollar borrowed.