BNPL giant Afterpay hints at expansion into SME lending

Aussie buy-now, pay-later leader Afterpay is reportedly considering making a move in the increasingly crowded small-business lending space.

Speaking at FinTech Australia’s Intersekt conference on Wednesday, Afterpay executive vice president Lee Hatton said launching new products is firmly on the agenda, and offering services for small businesses is a logical next step, the Sydney Morning Herald reports.

“For small businesses, access to capital or other adjacencies are such an important tool for those merchants to have,” Hatton said.

“We will definitely be asking those questions in the future.”

Hatton also reportedly said she is focused on the “second album” — that is, launching new products and services for both consumers and businesses.

As Afterpay expands on a global scale, it’s at a ‘build’ or ‘scale’ stage in various markets.

In Australia, she said, it has surpassed these stages and is “ready to evolve”.

It’s not clear exactly what Afterpay’s small business lending offering would look like, but it’s not the only BNPL player diversifying.

Aussie rival Zip launched its own business trade product just last month, offering a line of credit of up to $150,000 for small businesses.

At the time, Geof Alexander, general manager of Zip Business, pointed to cash flow as the “number one pain point” for SMEs.

Offering access to capital quickly helps alleviate this issue, allowing business owners to purchase what they need when they need it.

However, there are lingering questions around the way BNPL offerings for consumers are — or are not — regulated.

The industry has not been without its critics, who suggest they may not have the best interests of the consumers at heart.

High merchant fees, and controversial no-surcharge rules, which prevent SMEs from passing on the costs to consumers, have also led some to suggest BNPL products are no good for businesses either.

So, at a time when small businesses are especially vulnerable, should small businesses be encouraged to get into more debt?

For his part, Alexander didn’t see it that way.

He said Zip’s product isn’t designed to get small businesses in crisis out of a hole. Rather, it’s designed to help them pay for products and services that will boost their revenue in the long term.

As for what Afterpay has to offer, we will have to wait and see.