SMEs look to access credit in rising numbers

May 25, 2021

SMEs look to access credit in rising numbers

May 25, 2021

SMEs look to access credit in rising numbers

One in four small businesses intends to take out a borrowing product this year, providing a growing opportunity for brokers.

It was noted that there is a growing opportunity for brokers to service the credit needs of small businesses as confidence increases.

A survey conducted by RFI Group in December 2020 for the Australian SME Banking Council has shown that more than half (60 per cent) of small-business owners in Australia experienced negative impacts due to the COVID-19 pandemic expects to recover within the next 12 months.

According to the survey of 501 SMEs, 93 per cent of SMEs impacted expect to recover within the next two to three years or earlier, with only 2 per cent of SMEs surveyed believing that their business would never recover.

The proportion of SMEs who did not feel confident about the future of their business over the next 12 months dropped significantly. Approximately 8 per cent of SMEs did not feel confident in December 2020, down from a high of 16 per cent in September 2020.

The survey also found that a growing proportion intends to take out a loan in 2021.

While 18 per cent of SMEs stated they would take out a loan in June 2020, this rose to 24 per cent in December 2020.

Borrowing intentions were also closely associated with plans to invest in the business in the next year. For example, the intent was higher with SMEs that intend to invest in digital software (49 per cent), recruit new or more skilled employees (46 per cent), add sales channels (42 per cent), and expand geographically (43 per cent)

Just under a third of SMEs intending to invest in equipment and machinery intend to take out a borrowing product.

Seventy-four per cent of those intending to take out a borrowing product were also highly confident in their business’s future over the next 12 months.

Speaking of the research, Beau Bertoli, co-founder and chief revenue officer of Prospa, said the research “clearly highlights” the opportunities for brokers.

He said: “The study absolutely draws a clear link between a boost in confidence, plans for growth and intentions to borrow. Small businesses are increasingly looking for capital and our own data and originations trajectory reveal the same trend. Given the pent-up demand from the last 12 months, this is a crucial time for brokers to be talking to SMEs about their business plans and the funding options available to them”

DFS has been helping SME’s grow for many years, if you have a specific scenario you want to discuss with us, please reach out and one of our trusted advisers will work with you.

Source: Prospa via The Adviser

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