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Invoice trading is the new darling of Australia's fintech loan market

China’s 10-yuan commemorative coins for the Year of the Monkey. ChinaFotoPress/ChinaFotoPress via Getty Images

Invoice trading, where companies put up their unpaid invoices to get cash for their businesses, is booming in Australia.

It’s grown from almost nothing two years ago to $US105 million ($A140 million) in 2015, according to the first comprehensive research of the fintech loan market in Asia-Pacific by KPMG.

This alternative way for small businesses to raise cash has been made possible by the rise of digital networks and tools, making it easier for startup fintech players to connect with borrowers to grab a slice of a loan market which has traditionally belonged to banks.

Australia’s alternative finance market — including peer-to-peer lending and crowdfunding — grew 320% to $US348 million ($A466 million) last year to be the third largest in Asia-Pacific.

Calculated against per head of population, China is in top place at $US75.54 ($A101), New Zealand second at $US59.37 ($A79.64), followed by Australia at $US14.38 ($A19.29).

Here’s how the market looks in Australia:

The average annual growth rate has been 281%, going from $US24.22 million ($A32.49 million) in 2013 to $82.87 million ($A111.6 million) in 2014 and $348.37 million ($A466 million) last year.

The federal government introduced Crowd-Sourced Equity Funding amendments to the Corporation Act this month and the first equity-based crowdfunding platforms will able to be licensed from September.

Under the new rules, unlisted companies can raise up to $A5 million a year, with a limit of $10,000 per investor.

The federal government today announced legislation to allow new tax incentives for Australian entrepreneurs.

The alternative finance market study, Harnessing Potential, Asia Pacific Alternative Finance Benchmarking Report, surveyed more than 500 alternative finance companies, covering about 70% of the industry.

It was conducted by a research team from the Cambridge Centre for Alternative Finance, the Tsinghua University Graduate School at Shenzhen and the University of Sydney Business School, in collaboration with KPMG and with the support of the Association of Chartered Certified Accountants and CME Group Foundation.

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