Federal Election is no Easter treat for small businesses

New research commissioned by online SME lender OnDeck confirms that Anzac Day’s proximity to Easter combined with the upcoming Federal election will negatively impact many SMEs.

The research found that 59 per cent of SMEs surveyed say their business has been impacted by previous major political events, notably elections. Over one in four (27 per cent) SMEs expect the Easter/Anzac Day period to disrupt normal trading. SMEs operating in the accommodation/food services sector buck this trend, with 59 per cent expecting an uptick in business over the extended holiday period.

Cameron Poolman, Chief Executive Officer, OnDeck Australia, said, “Negativity around the proximity of Easter/Anzac Day is likely being driven by the need to manage employee leave requests. One in two (52 per cent) SMEs expect staff to take leave over the period, with one-third (31 per cent) of these business owners expressing concerns about possible staff shortages. A similar proportion (29 per cent) are expecting their cashflow to shrink over the public holiday period.”

Federal election brings uncertainty

Along with the disruption of the upcoming public holidays, the research found that six out of ten (59 per cent) small business have been impacted by political events such as Federal elections. Of these SMEs, 47 per cent experienced a slowing of normal business operations, and 30 per cent reported a drop in revenue.

Poolman noted, “The possibility of a change in Federal government often sees consumers and businesses put major purchases or projects on hold – at least until the polls have delivered a clear result. While that’s understandable, the SME sector bears the brunt of this ‘wait-and-see’ approach.”

Improved cashflow would allow SMEs to be better prepared

Many SMEs are ill-prepared for major disruptive events. The survey found that just one in three (36 per cent) are completely prepared for annual calendar events such as public holidays. Just 17 per cent of SMEs are completely prepared for political events, which have a less certain outcome. One survey respondent summed up the view of many, asking, “How can you prepare for the unpredictable?”

Three out of five (59 per cent) SME owners agree that improved access to cashflow would help their business weather a major event, a figure that rises to 69 per cent among SMEs with an annual turnover exceeding $200,000.

Noah Breslow, Global CEO of OnDeck, says, “Cashflow is the lifeblood of many SMEs. So it makes sense that additional funding can help SMEs navigate difficult the trading conditions that can accompany a critical event – be it a federal election or back-to-back public holidays.”

“We know, however, that SMEs face a high rejection rate from mainstream banks: 23 per cent have been knocked back for bank funding in the past,” Breslow added. “Among those that have sought finance, 29 per cent say the protracted application and approval process has negatively impacted their activities – so it’s not a seamless solution. Moreover, 65 per cent of SMEs were negatively impacted by being turned down by a bank for finance.”

“Online lenders offer a quick and easy application process, and we are not just a positive option for SMEs rejected by their bank. Online lenders such as OnDeck also offer the advantage of speed and convenience for those businesses that would be eligible for bank lending, and this can be a critical advantage in preparing for events that are likely to have a short-term impact,” Breslow concluded.

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