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How The SMART Box is driving transparency in Australian small business lending

by OnDeck Australia,   Jan 30, 2019

The emerging industry of Australian small business on-line lending has seen fast paced growth. Australia is now the second largest alternative finance market in the Asia Pacific region, growing at 37 per cent annually1. OnDeck is committed to driving transparency during this time of expansion and is proud to be involved in the Code of Lending Practice and The SMART Box.

In June, OnDeck and five other online small business lenders signed a Code of Lending Practice. One of the aims of the Code is to standardise transparency and disclosure in the emerging on-line lending industry in Australia and includes the introduction of a pricing comparison tool called The SMART Box.

The tool will help small business owners to compare the cost of Online Small Business Loans. Comparison metrics include Total Repayment Amount and Annual Percentage Rate (APR). It will provide a level of transparency for small business borrowers in Australia not currently offered by traditional lenders.

The SMART Box was first developed and launched in the US in October 2016. OnDeck was one of three founding members of the ILPA (Innovative Lending Platform Association), which created and launched The SMART Box in the US. OnDeck is now proud to roll out this initiative to the Australian market

The SMART Box stands for Straightforward Metrics Around Rate and Total Cost. In an easy to read format and in plain English, it aims to clear-up the confusion associated with different pricing metrics. The SMART Box provides business owners with their loan amount, disbursement amount and total repayment amount as well as the term of the loan expressed in months. The cost of the loan is expressed using different metrics, meaning they can easily compare competing short term loan options on an “apples for apples” basis. The seven major lenders who have signed up to the Code of Lending Practice are all using the same metrics, definitions and format in their customer contracts from January 1st 2019.

The transparency created by The SMART Box builds trust and confidence in the sector, as a strong alternative to the traditional banking offer. This is particularly important with the industry still in its infancy.

At OnDeck we are proud to offer The SMART Box to our customers in Australia. The transparency it creates is fundamental to our industry’s development as an integral member of Australia’s financial services community and most importantly to supporting the growth and success of Australia’s small business economy.

To find out more about The SMART Box and view a sample of document, you can read more here.

1. EY FinTech Adoption Index 2017

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