Research reveals that many SMEs will require business finance in order to restock after the lifting of the lockdowns. The survey, conducted by online SME lender OnDeck Australia, found that almost two out of five (36 per cent) of those who received approval for business financing used their loan to invest in new stock.
The research also reveals that one in three (32 per cent) SMEs with annual turnover between $500,000 and $5 million plan to apply for a business loan in the next 12 months, and that number rises to 50 per cent for businesses with annual turnover between $2 million and $5 million.
“The last three months have seen many small businesses in a forced lockdown,” Oliver Wade, Head of Marketing of OnDeck Australia, said. “This will leave plenty with outdated stock – especially retailers, who have lost much of the autumn trading season.
“As lockdowns are lifted and we make a return to more normal trading conditions, the SME community may still be facing disrupted supply chains, however, small businesses need to replenish their stock urgently – especially those that rely on seasonal inventory such as fashion and homewares outlets. The challenge can be a shortage of cash flow to support the purchase of new stock,” Wade added.
“This is where business finance can be pivotal in helping SMEs recover. Rebuilding stock sooner can be the key to fast-tracking back to normal trading volumes and recovering lost revenue.”
Despite the possible opportunities, the research also revealed that traditional sources of business finance may not be timely enough for SMEs to achieve a rapid restock. One in four (24 per cent) SMEs had their loan applications rejected by the bank, and the figure is higher among those operating for less than five years with 38 per cent. Even among those that have been successful in securing finance, 27 per cent the length of time taken to arrange the loan adversely affected their operations.
“Right now, many SME owners are focused on nurturing their business back to health,” Wade said. “Time spent on a lengthy finance application takes SME owners away from the main game, which is helping their business recover from a significant shock.”
