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Micro Loans for Centrelink Customers Explained

Are you a Centrelink customer looking to launch your own business? Frustrated by getting knocked back by banks because you have poor credit or because you’re receiving benefits? A micro loan might be the solution you’re looking for. The person-to-person nature of these financial solutions means micro loans for Centrelink customers are feasible where more mainstream loans might not be.

What is a micro loan?

Micro loans are person-to-person (P2P) investments typically used to fund a small business. Microlending is often used to fund entrepreneurs in developing countries where other loans are difficult to come by. However, they are also useful for small-business owners in developed countries who have poor credit history or are otherwise unable to get approved for finance with a bank or credit union. This is what makes them suitable for entrepreneurs who are on Centrelink.

How does a micro loan work?

People seeking a micro loan can reach investors via websites such as SocietyOne, MoneyPlace, Harmoney, and Wisr, which act as administrators for microlending arrangements. By doing this, you could get your business needs funded by either a single lender or a group of investors (each lending a portion of your total micro loan). You then pay back the loan to your investor(s) over time with interest, just like a regular loan.

Features and Benefits of Micro Loans

The main benefit of a micro loan is that you can potentially access a lender (or multiple lenders) regardless of your financial circumstances (e.g. bad credit, no credit history, or receiving Centrelink). The downside to this is that micro loans typically come with higher interest rates to account for the high risk that lenders are taking on board.

Microlending also comes with these advantages:

  • Quick and simple application process
  • Fewer complications and documentation
  • Technology makes it possible to access investors all over the world.

Why a Small Business Might Need a Micro Loan

Aside from launching in the first place, an existing small-business owner may need finance at various stages while running and growing their business. Microlending can help you overcome these obstacles if enough lenders trust you and are willing to invest in your business development.

Some scenarios where your small business might need additional financing via a micro loan include:

  • Expanding or renovating your premises
  • Growing your online presence (e.g. website, eCommerce, social media, email marketing)
  • Investing in new equipment
  • Hiring new staff and expanding your team
  • Diversifying your business with a new product or service.

How to Apply for a Micro Loan

Seeking a micro loan is similar in some ways to using a crowdfunding platform like Kickstarter. You apply for the loan through a site like SocietyOne or MoneyPlace, and they will attempt to match you with investors who will lend you the money you need. You may need to describe your business and explain how the money will be used in order to persuade potential lenders.

A micro loan isn’t always the most suitable option. If you need quick money for a small business upgrade, you may want to instead consider a cash loan of up to $1,000 with Cigno.

Disclaimer: Please be aware that Cigno Loans’ articles do not replace advice from an accountant or financial advisor. All information provided is intended to be used as a guide only, as it does not take into account your personal financial situation or needs. If you require assistance, it is recommended that you consult a licensed financial or tax advisor.

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Please consider your own circumstances before you use Cigno. Please make sure you read our Privacy Policy, Terms and Conditions and this Financial Risk Disclaimer.

Cigno is a business name of FTA Data Solutions Pty Ltd ABN 95 670 814 221.

FTA Data Solutions Pty Ltd is an Authorised Credit Representative (Credit Representative No. 552387) of Finance & Loans Direct Pty Ltd Australian Credit Licence No. 390166.

Cigno is not a credit provider or a credit assistance provider. When you complete the Information Form, you are not applying for credit or any other particular goods and services. The completion of our Information Form also does not guarantee that you will be provided with credit or any other goods and services through our network.

Depending on the information you provide to us in the Information Form, we endeavour to assist you by providing your information to our intermediary partners. Where we provide your information to our intermediary partners, we may receive a fee.

If the information you provided to our intermediary partners meets their requirements, they may connect you with a credit provider, goods and/or services provider and/or specific products to meet your their needs (depending on the information your input into the Information Form).

Any application you ultimately make through a particular credit provider or goods and/or services provider is subject to that provider’s eligibility criteria and terms and conditions. The loan, credit, product or service may not be available to every person. We do not endorse or recommend any particular provider, product or service that you be connected with or offered. All statement on this website are general in nature and do not constitute financial, credit or legal advice (or any other advice).

Contact

SMS: 0429 213 774
Email: [email protected]
Post: PO Box 1810, Southport BC, QLD 4215
ABN: 95 670 814 221

FTA Data Solutions Pty Ltd.

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NOTIFICATION OF MISCONDUCT BY CIGNO AUSTRALIA

Ordered by the Federal Court of Australia

The Federal Court of Australia has found that Cigno Australia Pty Ltd (Cigno Australia) and BSF Solutions Pty Ltd (BSF Solutions) have breached the law by engaging in unlicensed credit activity and charging prohibited fees.

In the period from July 2022 to 3 October 2023, over 100,000 consumers have been lent a total of $34 million, and charged fees of over $70 million, under the ‘No Upfront Charge Loan Model’ operated by BSF Solutions and Cigno Australia. At no time has either BSF Solutions or Cigno Australia held an Australian Credit Licence.

The Court also found that Mark Swanepoel (director of Cigno Australia) and Brenton James Harrison (director of BSF Solutions) were involved in these breaches of the law.

With effect from 24 May 2024, the Court has granted permanent injunctions preventing Cigno Australia and BSF Solutions from:

  • demanding, receiving or accepting fees or charges, including amounts of loan principal, from consumers in relation to credit provided under the ‘No Upfront Charge Model’; and
  • engaging in further credit activity pursuant to the ‘No Upfront Charge Loan Model’, including by entering into new agreements with consumers, for so long as they do not hold an Australian Credit Licence.

Cigno Australia was ordered by the Court to, by 5th July 2024, send written communications to consumers who between July 2022 and December 2022 entered into agreements with Cigno Australia and BSF Solutions under the ‘No Upfront Charge Loan Model’.

The Court will later determine whether (among other things) Cigno Australia and Mark Swanepoel ought to pay a pecuniary penalty in respect of this conduct, and whether Mark Swanepoel should be restrained from carrying on a business engaging in credit activity.

Cigno Australia, BSF Solutions, Mr Swanepoel and Mr Harrison intend to appeal the decision of the Court and have filed an application for leave to appeal. If the appeal is successful, some or all of the orders of the Federal Court of Australia may be set aside.

Where can you get more information?

Where to go for further support

You can access legal advice in your state at: Free legal advice – Moneysmart.gov.au.

If you are experiencing trouble with debt, or money worries in general, contact:

  • the National Debt Helpline on 1800 007 007 or online chat (9:30am to 4.30pm, Monday to Friday).

If you need someone to talk to, contact:

  • Lifeline on 13 11 14 (24 hours) or their crisis support online chat or
  • Beyond Blue on 1300 22 46 36 (24 hours) or their webchat