IPO - Prospa Group Limited, page-32

There are some ways to correct the lending model and improve returns while keeping the interest rate lower

Say it was a $20,000 loan less the below charges/fees
Loan Establishment Fee 20% = $4000
Service fee $50 month (no interest charged)
Interest rate 9%p.a for 12 months, then recaps at 18% in second year
**Can pay out early no penalty (enticement to payout early) + (Prospa make their fees anyway) meaning (less reliance on interest returns)
** If you payout the first 12 months P and I on time, you can reborrow the same amount (50% of gross loan) again (with an attached rollover fee ** Another bonus for Prospa) makes the loan book a continual revolving one.

This provides the borrower with higher fees yes, however the interest rate is acceptable.

Lastly, what you also provide each small business is a free business advertising section within a portal of some kind, where all businesses using the prospa product can sell their services, products etc to other prospa business customers, building a longer term sustainable catalogue of client.

Anyway, what would I know.