Small business lender Prospa Group suffered a significant fall in revenue in the year to June, as loan originations fell away in the December half. Lending picked up in the June half but not enough to generate revenue growth for the year.

Prospa’s revenue for 2020/21 was A$117.7 million – down 17.1 per cent from the previous year.

The loan book fell from a peak of $464 million in the March quarter last year to a low of $339 million in the September quarter. Growth resumed in the March quarter this year and the book reached $427 million by the end of June.

The company had a particularly weak December quarter, when it originated just $20 million. By the June quarter this year demand had recovered and it originated a record $183 million.

Prospa reported a loss of $9.5 million, compared with a loss of $24.9 million in 2019/20. The improved bottom line result was due to a much lower loan impairment expense, lower funding costs and cuts to operating expenses and employee expenses.

The loan impairment expense fell from $52.9 million in 2019/20 to $27.3 million in the year to June, thanks largely to a $13.7 million release from the expected credit loss provision. The bad debt expense of $35.1 million (net of recoveries) represented 9.7 per cent of average gross loans.

Funding costs came down from 5.7 per cent to 5.5 per cent of average debt.

Operating cash flow rose from $33.8 million in 2019/20 to $34.8 million in the year to June.

The company has $459 million of funding facilities, of which $97 million was undrawn at June 30.

It has 11,900 active customers. In Australia, the average business loan balance is $37,000 and the average term 15.9 months. The average line of credit limit is $46,000.

In New Zealand the average business loan balance is NZ$31,000 and the average term 15.1 months.

Prospa chief executive Greg Moshal said the company plans to increase its investment in its lending technology, distribution and product development.