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38% of SMEs considering alternative lenders
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12 May 2022
Over one-third of Australian SMEs are open to exploring their funding options with non-traditional lenders, according to a new report.
More than one-third of small and medium-sized enterprises (SMEs) across Australia are veering away from traditional banks.
This data is derived from an analysis of two years’ worth of SME Banking Council surveys.
According to the results, 38 per cent of the Australian SMEs said they would consider alternative or non-traditional lenders in the future.
The same data also noted that, as of December 2021, 15 per cent of these SMEs said they were interested in taking up new borrowing products over the next 12 months.
One explanation for this trend, as suggested by this report, is that SMEs were growing frustrated with the funding process of traditional banks.
Referenced in the release, 45 per cent of Australian SMEs expressed that competitive interest rates were a top driver when choosing a lender.
Speed of access to funds (35 per cent), flexibility in repayment options (32 per cent), digital banking capabilities (27 per cent) and the ease and speed of the application experience (24 per cent) were also listed as key decision factors for SMEs.
The COVID-19 pandemic put a “sudden, massive burden on SMEs, globally” and that they didn’t believe the banks did enough to assist them over this period.
Australia’s SMEs have made it clear that should they require financial support in 2022, they are less optimistic about getting it from their main banks.
This is a potentially worrying trend for traditional banks, considering that SMEs account for more than 97 per cent of all businesses in Australia, and contribute around $418 billion to [Australia’s GDP], equivalent to over 32 per cent of Australia’s total economy.
According to the Australian Small Business and Family Enterprise Ombudsman’s Small Business Counts December report, small businesses accounted for between 97.4 per cent and 98.4 per cent of all Australian businesses.
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