It was announced in yesterday's Financial Review that the government has now capped the interest rate that can be charged by lenders under its SME loan guarantee scheme at just over 10% pa.
My understanding would be that Prospa will therefore be excluded from the new scheme (from October 1) by virtue of the fact that Prospa's average interest rates exceed 10% pa.
On the expectation that Prospa will no longer write loans permitted to fall under the SME guarantee scheme, this would therefore mean Prospa now becomes 100% exposed to defaults, as previously compared to 50% exposure for loans written under the old scheme.
I imagine this may now cause speculation as to their lending appetite going forward in conjunction with probable higher provision for defaults.
No more SME guarantee scheme for Prospa?
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