*This article was originally published by the Financial Review
Alibaba will be teaming up with alternative finance lender Capify to target small business lending to 1.9 million Australian customers.
Ahead of the official announcement on Wednesday, Alibaba executive Michael Mang told The Australian Financial Review the company is making the lending facility on its website available to make it more convenient to buy things on the internet.
The company estimates there are around 1.9 million registered Australian users, many of whom are SMEs that are using the online platform to purchase capital for their enterprise.
"The purpose of the collaboration with Capify is to increase traffic and encourage more people to buy things on the internet. We're not competing with banks and we're not trying to create competition here. Buying and selling is the core of our business. We want to make it easier to buy online anywhere, any time." Mr Mang said.
The deal will allow Alibaba users to apply for an unsecured loan of between $5000 and $400,000 from Capify using an automated 60 second credit scoring model, at the factor rate ranging between 1.15 to 1.3.
John De Bree, Australian managing director of Capify, said while there is technically no limit to SME's access to capital, it expects to lend around $40 million to Australian SMEs over the next 12 months. It will be targeting SMEs that cannot get loans from traditional lenders such as banks.
"We lend money to SMEs that can't get loans through banks because they're worried about risks and reputational risks. The banks won't give them overdraft or personal loans they come to us. It's unsecured, and it's the higher risk market we're going for.
Capify has provided more than $100 million unsecured loans in Australia since 2008, under the brand name of AUSvance.
The New York-listed company Alibaba has recently ramped up its efforts to tap into the Australian market and signed a promotion deal with Tourism Australia and Alitrip last month.