SMEs increasingly seeking credit to free up cash flow

credit_cardsTNFigures from Veda's newly released Commercial Credit Demand Index for the first quarter of 2012 suggest that the number of SMEs seeking credit to free up cash flow is on the rise.

Figures from Veda's newly released Commercial Credit Demand Index for the first quarter of 2012 suggest that the number of SMEs seeking credit to free up cash flow is on the rise.
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The data intelligence and insights provider says that SMEs across Australia appear to be hurting, with credit enquiries traditionally associated with freeing-up cash-flow on the increase. Veda’s figures indicate that compared to the same period last year:

  • Credit card enquiries are up 32.5 per cent;
  • Overdrafts are up 76.8 per cent; and
  • Trade finance is up 68.5 per cent.

Veda says SMEs with between five and 50 employees represent about 12 per cent of Australia’s population, yet they typically drive around 49 per cent of credit enquiries and 55 per cent of external administrations.

“It’s no surprise that business credit applications have been stronger in the resource-sector heavy states,” said Moses Samaha, Head of Commercial Risk at Veda. “Overall there has been an increase in all states, which is a positive indicator, but highlights that the two-speed economy continues to accelerate the disparity between these state economies. It’s becoming apparent that there is also a deepening of the enterprise versus SME business divide across Australia, with SMEs relying on more credit options to smooth out cash flow.”

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