Half of the SMEs in Australia and New Zealand have been unable to secure sufficient, or any, funding on at least one or more occasions over the last five years, according to a new report from cloud banking platform Mambu.
the report, Small business, big growth which surveyed over 1000 SME owners globally, also reveals that more than two-thirds of SMEs globally have been unable to secure adequate business financing in that same period.
The top roadblocks to lending for ANZ SMEs cited in the report are slow lending speeds (32 per cent) and arduous paperwork or admin requirements (25 per cent).
The report noted that 21 per cent of SMEs in Australia and New Zealand were launched as a direct result of the founder being placed on Government assistance programs such as JobKeeper during the pandemic. Meanwhile, of the SMEs unable to secure sufficient funding, 39 per cent were unable to launch new products and services, 33 per cent were unable to hire effectively, and 29 per cent struggled to pay back creditors.
Mambu’s findings come amid a rise in alternative lending, as SMEs turn to upstart banks and fintechs to overcome funding roadblocks, with 95 per cent of SMEs in Australia and New Zealand say they are open to changing lenders for different or better offerings.
While low-interest rates are the top consideration for Australian and New Zealand SMEs when choosing a lender (80 per cent), being able to access long-term repayment plans (67 per cent), 24-hour customer service (65 per cent) and a short application process (61 per cent) are also seen as important considerations.
“Australia’s SME sector underpins the entire economy, with over 99 per cent of Australian businesses considered SMEs, and the sector employing around 68 per cent of the Australian workforce,” Myles Bertrand, Managing Director APAC at Mambu, said.
“While many large businesses have managed to profit and thrive throughout the pandemic thanks to various government supports and incentives, SMEs have had it much tougher. While government assistance programs like JobKeeper and the SME Recovery Loan Scheme have helped, for some SMEs the red tape, paperwork and admin required puts these initiatives out of reach,” Bertrand added.
“It’s no wonder that only half of all SMEs launched in Australia survive longer than four years. It is critical for our future economic success that SME lenders address these pain points and modernise their financial offerings to include faster processing times, reduced admin requirements and quicker access to funds.”
“The SME sector in Australia has had a very difficult few years,” Paul Apolony, General Manager, Australia and New Zealand, at Mambu, said. “It is an incredibly hard time to be in business and being able to access adequate funding is one thing that can make an enormous difference.
“While we’re seeing some great innovations in the SME lending space from a few cutting-edge, tech-enabled lenders, on the whole, the SME lending industry needs to proactively harness the power of digital technologies to improve the experience for their customers.”
Richard Lim, CEO of Retail Economics, pointed out that COVID has resulted in huge changes in the way we work, play and shop, which has accelerated the democratisation of the digital landscape. However, Lim bemoaned the fact that access to capital is an area where digitisation has matured at a much slower pace, describing current lending practices as “no longer fit-for-purpose in today’s fast-paced, digital world”.
