Zip Business Review for Potential Borrowers
Zip Business Review for Potential Borrowers
This Zip Business Capital review (previously Spotcap business loans until 2020) will help readers make an informed decision as to whether Zip Business Capital is the best fit for their business finance requirements. . We’ll look at the credibility of the lender following its recent acquisition and change of name from Spotcap. We’ll see what existing clients have had to say about their experience with Zip Business and we’ll break down in detail their two lending solutions – the Zip Business Line of Credit and Zip Trade (Buy now, pay later, for business). Read the following Zip Business review to discover Zip’s eligibility criteria and the terms on offer.
Zip Business Review –( Formerly Spotcap) Basic Figures for 2022
Website
Logo
ABN
71 602 957 237
Credit License
602 957 237
Loan Amount
$10,000 – $500,000
Loan Term
1 month – 36 months
Unsecured Loans?
Unsecured Loans through Line of Credit are Available
Lender Requirements
- Trading for at least 18 months
- Turnover greater than $200,000 per year
- Profitable business
Required
BAS for the last 4 quarters, financial statements for the last 2 years. All previous bank account statements from all prior years.
Response Time
Approval normally within 24 hours.
Easy to Apply
Yes, fully online
The Nitty-gritty
Online Reviews
0 Zip Business Reviews. There are exactly 100 reviews of Spotcap Australia but the latest review was left in November 2018. These reviews were generally positive, scoring the firm 4.5 / 5.
Awards and Recognition
- Finalists at the 2017 Australia Fintech Awards “Finnies”
- Finalists at the 2018 Australia Fintech Awards “Finnies”
Minimal Interest Rates
Fixed interest rates and a drawdown fee applicable each time you borrow against your credit line.
The Zip Business Loan calculator, based on the average Zip Business customer, suggests interest of $10,016 on a $100,000 loan over 12 months. These indicative costs seem exactly the same as when the business loan calculator was featured on spotcap.com.au.
Credibility & Company Story
History of Spotcap
Spotcap was an innovative global lender for small and medium-sized businesses. The company was founded in 2014 by entrepreneurs Jens Wolosczak and Toby Triebel in partnership with Rocket Internet and offered business loans throughout Spain, the Netherlands, the UK, Australia, and most recently, New Zealand (until the Australia and New Zealand arm was acquired by Zip Co).
Headquartered in Germany, the company grew to a team of over 130 staff and originated over $300 million in credit lines around the world, with an estimated $23 million issued to Australian SMEs.
Spotcap continues to operate as a direct lender to small and medium-sized enterprises (SMEs) in the United Kingdom, the Netherlands and Spain. The Australia and New Zealand divisions have been part of Zip Co since 2019.
The Funding Rounds
- Since 2014, Spotcap conducted 6 funding rounds and raised a total of US$113 million from multiple investors based in Russia, Israel and Europe.
- In 2014, Spotcap raised €13 million from a group of investors led by billionaire Len Blavatnik’s Access Industries.
- In 2015, Spotcap received €5 million in debt financing from Kreos Capital, a European growth debt firm that provides financing solutions for high-growth companies across Europe and Israel.
- The following year, Spotcap reinforced its capital line with €31.5 million in new funding. It was the company’s third funding round in the space of 18 months and was led by Russian private equity firm Finstar Financial Group, with participation from previous investor Holtzbrinck Ventures.
- Less than 6 months later in June 2016, Spotcap announced a €14 million funding round taking its 2016 total to €45.5 million. The lender said the additional funds would be specifically designated for the Dutch market and said it expected to provide €50 million in credit to Dutch companies on an annual basis.
- In January of 2018, it raised A$20 million from Heartland Bank, a New-Zealand-based community bank located in central Ohio in the United States which provides a variety of financial services in the US. The investment round also coincided with Spotcap opening its first office in Auckland, New Zealand. In October 2017, it raised €22 million from its existing investors.
The History of Zip Co
Founded by Larry Diamond and Peter Gray in 2013, Zip is an Australian FinTech that’s most well known for its Zip Pay solution, a product for end consumers and businesses alike. With the old motto “buy now, pay later” it’s a consumer credit offering that allows individuals to make purchases on credit and then pay off their purchases over time. For businesses it allows them to provide customers with another payment option on checkout.
In 2015, Zip was listed on the Australian Securities Exchange as zipMoney Limited (ASX: ZML) and has raised over $65 million in funding. It has a $200 million debt facility with National Australia Bank, and a $40 million equity investment from Westpac Bank. A high growth company, Zip was ranked #7 on Deloitte’s Technology Fast 500 APAC.
In September 2019, Zip Co acquired SpotCap Australia and Spotcap New Zealand with the firm now trading as Zip Business. It’s still the same Spotcap team, delivering the same service and products to help Australian SMEs grow their business – just with a fresh new look. It’s reported that the IP (including the proprietary credit algorithm) will be licensed perpetually from Spotcap Global, ensuring Zip Business can continue to make fast lending decisions that can result in borrowers receiving funds in under 24 hours from application.
What Finance Options Do Zip Business Offer?
Zip Business Line of Credit
The primary lending product that Zip Business offers is exactly the same as it did during its time trading as Spotcap – an unsecured line of credit up to $500,000 which gives clients the flexibility to draw down once a day up to the maximum size of their facility. Each time a customer draws down, that amount is then considered a loan. So if you came here looking for an unsecured business loan, that’s still possible through Zip Business, you just have to open a line of credit first. The benefit of this is that once you’re approved for your facility you can continue to redraw against it for as long as you’ve agreed your line of credit to be in place. It’s reported that the size of the line of credit facility you are eligible for is roughly equivalent to your business’ monthly turnover.
FROM: zip.com.au/business/capital
Zip Business Trade / Zip Business Trade Plus
The Zip Trade account, dubbed “buy now, pay later, for business” allows businesses to cover their expenses and then pay these back to Zip at a later date. The solution is split into two different products, dependent on the size of the facility.
Zip Business Trade
The Zip Business Trade account is designed for everyday and unexpected expenses between $1,000 – $3,000 with quick funds and flexible repayments. A decision is made online and within minutes. Businesses can pay their bills through BPAY and then have these funded by Zip.
Zip Business Trade Plus
Zip Business Trade Plus is designed for larger expenses between $3,000 – $150,000 like supplies, equipment and services to help your business grow. In addition to BPAY functionality, the Trade Plus account allows businesses to finance in-store payments or online payments wherever visa is accepted. However, given the larger transaction size, lending decisions can take up to 1 working day.
Both accounts are advertised as “always interest free” if customers repay any transaction by the end of the following month (in this sense a bit like a credit card). On the smaller Zip Trade account, customers are required to pay a $20 extension fee on any transactions which are not paid off during this time. On the larger Zip Trade Plus account, customers automatically move to a repayment plan of 4 equal monthly repayments with a one-off extension fee of 4%
Zip Business Loans Client Reviews
By the look of things, Zip Business is yet to be linked to a customer review platform. All reviews have been left under the profile of Spotcap Australia, with the most recent being from November 2018. There have been zero reviews of Zip Business Capital from 2019 – 2022. So it must be said these reviews are rather outdated to get a feel for how Zip Business operates today, however, given that the team and offering remains the same we’ve included the Spotcap Australia reviews for reference below.
In Numbers
- TrustPilot Australia: 100 Reviews, 83% Excellent, 12% Great, 5% Bad
The Feedback:
With 95% of the feedback being positive, we’ve highlighted some of the comments here:
Given there are exactly 100 reviews, 5% of reviews being negative means there are exactly 5 bad reviews. 3 of these 5 reviews seem to relate to customers who were rejected for financing – a common complaint in the lending industry, particularly if a business owner is confident they can afford the repayment schedule. In fairness, it looks as if Spotcap has responded to each of these reviews in detail and offered to speak to each customer in more detail to explain why they were rejected for a line of credit. Of the other 2 negative reviews, one relates to the cost of the loan so will be discussed more in our rates section. The other poor review relates to an NZ based company who received an unsolicited email from SpotCap promoting their services – a breach of local regulations.
Analysis of Client Reviews:
95% of Zip Business reviews / Spotcap reviews are highly positive and praise the customer service received and prompt nature in which they were able to access finance. It seems virtually everyone’s expectations were exceeded and many can’t believe how much better the service is, when compared to applying for a business loan with a bank.
The majority of the negative reviews relate to the strict application requirements (and the fact that Zip Business / Spotcap will take careful stock of negative financials).
Have a read of the reviews for yourself but approach them with caution – the reviews are outdated and may not give a fair reflection of Zip Business and the customer service it offers today. Overall, we still believe the application to be easy and customer service to be professional. However, we would certainly like to see more recent feedback. If you’re an existing Zip Business customer, drop us a line about your experience.
Zip Business Online Platform – business.zip.co
Zip’s online application is straightforward and can be completed in as little as five minutes, either online or in collaboration with a financial advisor, broker or accountant.
The eligibility criteria to apply for a Zip Business Line of Credit is clearly detailed and there are a number of FAQs which make the product and its associated terms and fees easy-to-understand. There’s also a video testimonial that potential borrowers can watch to get a feel for what the lending process with Zip looks like and how long it takes.
For financial brokers and advisors, the company claims to operate a “full-service lending platform” and works with leading institutions to provide their SME clients with an efficient and straightforward lending experience.
Zip Business Loan Compatibility
- Startup: No, Zip Business requires that you’ve been trading for 18 months.
- Bad credit: No, Zip Business requires access to complete financial records of your business bank account.
- Sole trader: Yes, Zip Business works with sole traders.
- Established business: Yes, Zip Business accepts established businesses.
- Turnover: Zip Business requires at least $200,000/year turnover.
The eligibility criteria for a Zip Business Loan is some of the toughest of any online business lender. To put it into perspective, some lenders, such as Lumi, ask for a minimum of 6 months trading and a $5,000 monthly turnover (i.e. $60,000 per annum). In fairness to Zip, the eligibility criteria is clearly displayed on their site so it avoids any time wasting of potential applicants.
Zip Business Rates & Pricing
Based on information from the Zip Business website, we can see there is no origination fee for the Zip Line of Credit but each drawdown sees a 2% drawdown fee.. To put this into perspective Prospa, OnDeck, and many of Australia’s best online business lenders charge a 3% origination fee for a one off business loan so a 2% drawdown fee stacks up pretty well.
The online loan calculator available on zip.business.co, indicates interest of $10,016 on a $100,000 loan over 12 months. The firm is keen, however, to stress the calculator is for illustrative purposes only and the example is based on an average Zip Business customer. At roughly 10%, this would represent a decent borrowing rate for an online business lender.
One borrower has this to warn in his review, “They quote Interest COST. This is very different to interest RATE. The rate is actually 1.9% per MONTH. Which is ~23% per annum! Not the 12.78% that they quote in the documents and over the phone.” The borrower raises an important point here – be sure to understand how your interest cost compares to an annualised rate, particularly when you are borrowing for under a year. If you really want to be sure you’re comparing like-for-like, ask the lender what the APR is on the loan (this takes into account interest + all associated fees). Based on the information available in the review, it would appear this borrower was looking at taking a loan for roughly 6 months and achieved a rate of 12.78%. This is why the figures we’ve quoted from the Zip Business Loan calculator are based on borrowing for 12 months.
On the flip side, one borrower has this to say about their rate, “Amazing customer service and was the same interest rate as CommBank & ANZ.” The borrower was amazed they were able to achieve the same rate, given how much faster and more superior the service was – receiving a loan in 24hours instead of months. Overall, we have to assume the majority of borrowers were happy with the cost of their loan given they rated the service 5 / 5.
Zip Business Review Summary
Name: Zip Business
Summary
Interest Rate / Factor Rate
Based on information from the Zip Business website, we can see there is no origination fee for the Zip Line of Credit but each drawdown sees a 2% drawdown fee.. To put this into perspective Prospa, OnDeck, and many of Australia’s best online business lenders charge a 3% origination fee for a one off business loan so a 2% drawdown fee stacks up pretty well.
The online loan calculator available on zip.business.co, indicates interest of $10,016 on a $100,000 loan over 12 months. The firm is keen, however, to stress the calculator is for illustrative purposes only and the example is based on an average Zip Business customer. At roughly 10%, this would represent a decent borrowing rate for an online business lender.
One borrower has this to warn in his review, “They quote Interest COST. This is very different to interest RATE. The rate is actually 1.9% per MONTH. Which is ~23% per annum! Not the 12.78% that they quote in the documents and over the phone.” The borrower raises an important point here – be sure to understand how your interest cost compares to an annualised rate, particularly when you are borrowing for under a year. If you really want to be sure you’re comparing like-for-like, ask the lender what the APR is on the loan (this takes into account interest + all associated fees). Based on the information available in the review, it would appear this borrower was looking at taking a loan for roughly 6 months and achieved a rate of 12.78%. This is why the figures we’ve quoted from the Zip Business Loan calculator are based on borrowing for 12 months.
On the flip side, one borrower has this to say about their rate, “Amazing customer service and was the same interest rate as CommBank & ANZ.” The borrower was amazed they were able to achieve the same rate, given how much faster and more superior the service was – receiving a loan in 24hours instead of months. Overall, we have to assume the majority of borrowers were happy with the cost of their loan given they rated the service 5 / 5.
Overall
-
Credibility - 95%
95%
-
Client Reviews - 92%
92%
-
Website - 86%
86%
-
Compatibility - 80%
80%
Pros
- Unsecured Line of Credit
- Highest Loan Amount of All Lenders
- Clear Terms and Conditions
- Reply Within 24h
- All Client Reviews are Highly Positive
- Avg Interest Rate ~10%/yr
Cons
- High Requirements – Min. 200,000 annual turnover