Majority of SMEs tapping multiple lenders for their working capital

lending, small-business, borrowers

As economic challenges and uncertainty persist, a new report reveals that 80 per cent of SMEs have partnered with more than one lender in their efforts to secure the working capital they need.

The latest edition of the bi-annual SME Growth Index by non-bank business lender ScotPac highlights the fact that in their efforts to secure multiple working capital providers, more SMEs are looking beyond their main relationship bank. In particular, the preference for non-bank lending remains at an all-time high of 47 per cent, which is double the figure recorded in March 2022.

When asked to expand on their approach to secondary working capital relationships, 67 per cent of SMEs responded that ease of credit approval was the leading factor for choosing a secondary provider, while 37 per cent rated higher credit limits. Meanwhile, the 60 per cent that do not have a secondary lender said that jumping through the onboarding hoops of a new provider was ‘all too hard’. And 61 per cent of SMEs stated they plan invest in their business in the next six months, noted as a 15 per cent jump year-on-year, and the highest level of investment intent recorded since 2019.

ScotPac CEO, Jon Sutton, said the high level of investment intent, combined with the appetite of SME owners to explore the lending market, emphasised the need for businesses to maintain a strong relationship with their broker.

“Despite the macroeconomic headwinds of rising wages, stubbornly high inflation and uncertainty about interest rates, Australian SMEs are continuing to invest in their businesses at near record levels,” Sutton said. “While some of that growth can be attributed to higher input prices, the strength of SME investment intent goes beyond this factor alone.”

“An emerging driver is choice. Non-bank lending has doubled in the past 18 months as SME owners and brokers have become increasingly aware of the opportunity to find fast, flexible and tailored working capital solutions, with easier onboarding than ever,” Sutton added. “With a large number of SMEs intending to self-fund their growth plans, or still unsure of how to fund new investment, there are some great opportunities in the current market for brokers to help thousands more SMEs while growing their own business.”