Small businesses in Australia are struggling to secure loans, according to a new study.
The Small business, big growth report from cloud banking platform Mambu surveyed more than 1,000 SMEs globally, including businesses in Australia and New Zealand.
The study, as reported on the Australian FinTech site, found that half of SMEs in Australia and New Zealand had been unable to secure sufficient, or any, funding on at least one or more occasions over the last five years. More than two thirds of SMEs globally had been unable to secure adequate business financing in that same period.
The report showed that significant barriers exist for SMEs seeking business loans, with slow lending speeds (32%) and arduous paperwork or administration requirements (25%) the main roadblocks for SMEs in Australia and New Zealand.
It also showed that one in five (21%) SMEs in Australia and New Zealand were launched as a direct result of the founder accessing government assistance programs such JobKeeper during the pandemic.
Of the SMEs unable to secure sufficient funding, 39% were unable to launch new products and services, 33% were unable to hire effectively, and 29% struggled to pay back creditors.
Mambu’s report come as more and more small and medium-sized businesses seek out non-major banks, customer-owned banks and digital banks for finance options. A whopping 95% of SMEs in Australia and New Zealand said they were open to changing lenders for different or better offerings.
While low interest rates were the top consideration for Australian and New Zealand SMEs when choosing a lender (80%), being able to access long-term repayment plans (67%) and 24-hour customer service (65%) were also strong drivers. A short application process was also important, with 61% of SMEs identifying this as an important factor when choosing a lender.
Read more: Open banking a mystery to most people
“Australia’s SME sector underpins the entire economy, with over 99% of Australian businesses considered SMEs, and the sector employing around 68% of the Australian workforce,” Mambu APAC managing director Myles Bertrand (pictured) told Australian FinTech.
“However, while many large businesses have managed to profit and thrive throughout the pandemic thanks to various government supports and incentives, SMEs have had it much tougher.
“While government assistance programs like JobKeeper and the SME Recovery Loan Scheme have helped, for some SMEs the red tape, paperwork and admin required puts these initiatives out of reach. It’s no wonder that only half of all SMEs launched in Australia survive longer than four years.”
Bertrand said it was critical for our future economic success that SME lenders address these pain points and modernise their financial offerings to include faster processing times, reduced admin requirements and quicker access to funds.
