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Demand for credit among Australian small businesses has surged, with 94 per cent seeking new capital.
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Business lender reports spike in credit demand from SMEs
21 November 2024
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Recent research from ScotPac has revealed that most Australian SMEs are looking to boost their capital in the foreseeable future.
The latest edition of ScotPac’s biannual SME Growth Index Report revealed just 6 per cent of Australian SMEs had ruled out new borrowings over the next six months.
It was also demonstrated that credit demand was stronger for the 40 per cent of SMEs described by their owners or managers as being in a growth phase, with a near-unanimous 97 per cent of the category foreseeing a need for short-term business lending.
The 21st SME Growth Index Report was conducted by interviewing 726 SME enterprises that have been in operation for an average of 15.4 years, have 55 full-time employees, and have annual revenues between $1 and 20 million.
ScotPac CEO Jon Sutton said a combination of economic, technological and regulatory factors combined to create an environment where SMEs’ demand for flexible credit had reached new levels.
“The post-COVID economic recovery has seen tens of thousands of SMEs seek credit to re-establish their supply chains and boost their purchasing power,” Sutton said.
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“At the same time, regulatory changes have paved the way for an expansion of non-bank lending and new technology has made lending solutions easier to navigate and more accessible to more businesses.”
In a related finding, ScotPac said the speed and comparative ease of online-only applications had emerged as the winner regarding how SMEs preferred to commence new finance inquiries.
It was found that 48 per cent of SMEs expressed a preference for online-only loan applications and 19 per cent said they wanted to work with a lender who provided flexibility between online-only applications and dedicated customer service resources.
Additionally, 10 per cent of SMEs said they preferred to work solely through a relationship manager, with SMEs in a business growth phase three times more likely to favour this option than those in a neutral or declining growth phase.
Sutton said the need for expert advice and support was greater than ever despite the growth in popularity of online-only applications.
“We understand that time is the greatest asset any SME owner or operator has,” Sutton said.
“The growth in SME demand for finance means brokers who have kept pace with new products will be well-placed to educate SMEs and help them take advantage of appropriate lending solutions.”
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