Declined by Prospa? Here is what to do next

If Prospa declined your application, or offered less than you need, the answer usually came from your bank statements and turnover, which is how Prospa mainly assesses unsecured loans. HomeSec lends $20,000 to $5,000,000 against equity in real estate instead, with no bank statements, no turnover test and up to six months of no repayments.

If Prospa declined your application, or it stalled, or the offer came back smaller than the job in front of you, you are in a very common spot. It says more about how unsecured lending is assessed than about your business. HomeSec offers Australia's fastest and most flexible business loans, with up to 6 months no payments, and we look at something your bank statements cannot show: the equity in property you or the business own.

About Prospa, briefly

Prospa is one of Australia's larger online small-business lenders. It offers unsecured term loans and a line of credit, assessed mainly on the business's bank statements and turnover. For a business with steady deposits and a clean file, that can be a quick and convenient way to borrow a modest amount, and for some businesses it is the right product.

Why a statements-based application gets declined

When the assessment rests on what passes through the bank account, these are the usual reasons the answer is no, or less than you asked for:

• The months supplied were quiet ones. Statements are a snapshot. If they cover the slow end of your year, the turnover figure is the low one, and the amount offered follows it down.
• Takings are spread across accounts or arrive as cash. Card sales landing in one bank, cash going straight to wages or stock, a second account for a second site. The statements show part of the business and the assessment sees only that part.
• Dishonours or overdrawn days. A few days below zero, or a bounced direct debit, can count heavily even when it was a timing problem that sorted itself out.
• Repayments already coming out. Another lender's daily or weekly debit reduces the room the next lender thinks you have. More on loan stacking.
• Something on the credit file. A default, a judgment or an ATO payment plan can stop an unsecured file before anyone looks at why it is there.

What changes when the loan is secured on property

We do not read your bank statements at all. A HomeSec loan is assessed on the property, the equity in it, the business purpose and how the loan is repaid. So the quiet months, the cash takings and the second account stop mattering. The amount is set by equity, up to 80% of a residential property's value or 70% of a commercial one, less what is owing, from $20,000 to $5,000,000.

If what you were really after was a line of credit, the closest thing we offer is an open term: no minimum, no maximum and no penalty for repaying early. Ad-hoc paydowns from $10,000, once outside the capitalised-interest period. That covers most of what people want a line of credit for, without a limit set by last quarter's deposits.

What to do in the next 24 hours

1. Hold off on more applications. Each one can leave an enquiry on your credit file, and several in a few days make the next lender more cautious, not less.
2. Write down what you were told. The amount you asked for, the amount offered if any, and any reason given. It helps the next conversation go faster.
3. Pull together the property details. Address, a rough idea of value and what is owing on it. No valuation or statements needed.
4. Decide how the loan gets repaid. A refinance, a sale, a contract that pays or simply time. The exit carries the most weight with us.
5. Ring a Lending Manager. You will usually get an indicative answer on the call.