NFP Partners with NAB to Launch Low-cost Small Loan Alternative

A national not for profit has teamed up with NAB to launch a small loan alternative offering low-cost finance solutions, after new research revealed more than one in five Australian households were relying on payday loans to cover the cost of living.

Good Shepherd Microfinance has worked with NAB for more than 15 years, and have now launched Speckle – a fast, online cash-loan which provides a cheaper alternative for people seeking small cash loans under $2,000.

It comes as new research from Digital Finance Analytics found that one in five households in Australia have used payday loans over the past three years, due to an increasingly casual workforce, the rising cost of living and low wage growth.

The use of short-term cash loans by Australian households has more than doubled in the past 12 years, from 356,000 in 2005 to 786,500 last year.

Added to this, research from the Centre for Social Impact and NAB found 2.4 million adults in Australia faced some level of financial stress in 2016, while around a quarter of the population lacked access to any form of credit such as a credit card or personal loan.

Good Shepherd Microfinance CEO Adam Mooney, said Speckle was developed to address this need for a low cost loan alternative.

“Speckle loans are up to 50 per cent cheaper than most other small cash loans. Most lenders charge the maximum fees allowed by law. As a not-for-profit program, Speckle is significantly cheaper for customers,” Mooney said.

“Every day we see the negative impact of high cost loans on individuals and families. In addition, the latest research shows that the number of women using short term cash loans continues to increase and women tend to use these loans at an earlier age than men.

“It was clear that we needed a better solution for anyone who needs to use small cash loans. Speckle will enable people to access lower cost credit when they need it most.”

Speckle’s fees include a 10 per cent establishment fee and 2 per cent monthly fee compared to the market norm of 20 per cent and 4 per cent respectively, while repayments can take up to a year with no extra fees.

NAB CEO Andrew Thorburn said Speckle would utilise skilled volunteers from across the bank, in order to create a fair and affordable financial product that addressed this gap in the market.

“We know there are many people who, because of their financial situation don’t typically qualify for mainstream finance, and are having to turn to payday loans. We’ve worked with our long-term partner Good Shepherd Microfinance to develop Speckle as a better alternative,” Thorburn said.

“At NAB, we want to support people to improve their financial resilience so if times get tough they can bounce back better. It’s important that everyone can access appropriate credit.”

Speckle follows previous affordable finance collaborations between Good Shepherd Microfinance and NAB with the No Interest Loan Scheme (NILS) and StepUp low interest loans.