New research reveals SMEs’ growing demand for alternative lending

New independent research commissioned by PayPal reveals that three-quarters of Australian SMEs (75 per cent) think the process of securing a traditional business loan is more difficult than it used to be. A further two thirds (67 per cent) think getting approved for a business loan is increasingly becoming a barrier to doing business. One in five (20 per cent) SMEs have even been refused a bank loan in the past.

PayPal’s research found that two in five SMEs (42 per cent) have used a non-bank, alternative lender and when asked how their consideration of sourcing a business loan has changed in the last year, two in five (39 per cent) said they would be more likely to consider a non-bank, alternative lender, compared to only 18 per cent who said they would only consider a traditional bank loan. This preference for alternative lending jumps to 54 per cent for SMEs that have been operating for less than five years and 70 per cent for SMEs that have previously used a non-bank, alternative lender.

Andrew Baines, General Manager, PayPal Credit in Australia, said, “The businesses we work with have told us that securing a traditional business loan can be a long and drawn-out process; time which many small businesses just don’t have. Increasingly, we are seeing businesses seek tailored solutions which meet their business needs and bridge the gap left by traditional funding providers. In order to remain successful, it is important that Australian SMEs are weighing up their options and sourcing the best lending solution for their business.”

The research also found that the majority of Australian business owners are stressed about cashflow, with the research revealing nearly two in three SMEs (61 per cent) are concerned about the new financial year and half (48 per cent) are more anxious than they were last year about cash flow. In fact, over a quarter of Australian SMEs (28 per cent) are always worried about cashflow. According to the research, the main factors causing cashflow pressure are customers spending less, rising costs and tougher lending standards imposed by the big banks.

Pay Pal recently announced that it has provided over $500 million (AUD) of funding to Australian small business through its alternative finance offering, PayPal Working Capital, via over 25,000 business loans to more than 7000 Australian small businesses.

“At PayPal, the support we offer to small businesses goes beyond being a button on a website. PayPal Working Capital only launched in Australia less than five years ago, and with over $500 million now issued to more than 7,000 businesses, we can see that there is an ongoing demand for alternative finance solutions to support small businesses and to help them thrive.”

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