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Pre-Christmas surge in SME loan demand

Pre-Christmas surge in SME loan demand

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SME loan applications were nearly 2.5 times above the monthly average in November, with demand highest among accommodation and food businesses, new data shows.

Credit applications from small businesses across all industries surged by 145 per cent in November in line with high consumer demand for goods and services during the festive season and end-of-year period, according to recent data analysis by OnDeck Australia.

Demand for loans were noticeably high in the “service industries”, such as accommodation and food, with the number of applications 190 per cent higher than the average recorded in November 2017.

Bucking the festive season and end-of-year trend, retail and wholesale trade lending remained stable through the calendar year, the SME lender’s analysis shows.

Michael Burke, head of sales at OnDeck Australia, suggested that brokers understand the impact of seasonal lending patterns on their small business clients as there are differences across sectors.

He added that brokers should also “build an understanding of the data and its implications with their clients, and to work with them to ensure they take advantage of lending cycles in their specific industry and maximise growth opportunities for their business”.

The SME lender’s data analysis further showed that most small businesses were applying for loans in the middle of the week and during business hours.

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The news follows the federal government’s recent announcement of its commitment to establish a new $2 billion taxpayer-backed Australian Business Securitisation Fund (ABSF) to “significantly enhance” the ability for small businesses to borrow funds by providing “significant additional funding to smaller banks and non-bank lenders to on-lend to small businesses on more competitive terms”.

Pre-Christmas surge in SME loan demand
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