Online business lender Moula Money – the brainchild of Melbourne banking entrepreneur Aris Allegos and co-founder Andrew Watt – has secured $30 million in debt and equity funding from Liberty Financial and other backers, in its first major deal to finance loans to small businesses.

Mr Allegos says the funds from Liberty – which lends to businesses who often struggle to find loans from traditional lenders, will give him more finance to help small businesses and put further clear blue water between Moula and its global competitors, many of which give the sector a bad name, with high interest rates on unsecured loans getting borrowers into trouble.

Started in 2014, Moula’s online loans of up to $20,000 on six-month terms created a new business model in Australia with few local competitors. Focusing initially on eBay sellers, Moula analysed data feeds directly from transactions to develop their products.

Over the past year at least five other players – either overseas or backed by offshore finance – have targeted the small business market in Australia, including US-based PayPal.

“All we need is a couple of bad situations that result in the entire industry getting tarnished, a bit like what has happened in payday lending,” Mr Allegos told reporters this week.

Meanwhile, the Australian Securities and Investments Commission has tightened regulation on lenders that offer similar loans for consumers by applying responsible lending laws introduced in 2010. However small businesses are exempt.

Unlike traditional lenders, Moula provides funding with a minimum of bureaucratic oversight, tapping into an applicant’s ecommerce data to eliminate paperwork and approval procedures.

Of Greek Cypriot heritage, Mr Allegos is an MBA graduate from the London Business School and spent over 15 years working in banking, much of the time overseas, before setting up Moula.

Prior to that he experienced the challenges faced by small business first-hand with his family’s toy wholesale company in Oakleigh.

Asked how the Liberty Financial deal would impact Moula, Allegos told Neos Kosmos the new investment would enable it “to maintain our current growth through investment in people, technology and, importantly, education and marketing”.

“Small business lending is self-regulated and prone to predatory lending, [but] our pricing model is transparent: no hidden fees, no establishment fees, no penalty for early repayment,” he said.

“As a data-driven online lending platform, we’re different to other lenders as we use technology to automate the underwriting and on-boarding process.”

Moula’s loans are processed online and require borrowers to supply a date source such as cloud-based accounting software or a bank account, to enable real-time underwriting.

Real-time sales data and performance history are also factored in to make the final lending decision.