Dan McCarthy, head of sales and partnerships at SME lender Sail Finance, told My Business sister brand The Adviser that regional and rural businesses were facing “more challenges than ever” to keep afloat given the ongoing climate crises, such as bushfires and ongoing drought.
Given this situation, he urged brokers to help these small businesses access the funds they need to keep the lights on over the holiday period and beyond.
Mr McCarthy elaborated: “Seasonability has always been a challenge for regional businesses, particularly agricultural business, and we’ve now seen an unprecedented dry spell in some parts of Australia followed by terrible bushfires, which means that many businesses are either going to be missing an entire season worth of crops or their business will need to close for a certain period of time. That will mean that they will have a need for capital.
“The issue is that small businesses form such a big part of the economy in Australia but they may not be aware of some of the opportunities that are available to them in the financial sector. So, there is a real need and opportunity for brokers here.
“Brokers are able to go and meet these borrowers, catch up with them face to face, understand the issues they are facing, and make them aware that they can actually access credit and help them solve these problems. That is a really big thing,” he said.
“Now is the best time to introduce regional borrowers – who are facing more challenges than ever – to non-banking lenders, which can provide funding very quickly. Speed of service is a really big thing… and in traditional banking methods, it can take weeks to get a loan approved, but for fintechs it can be less than a day.
“And for a business that is facing these challenges, or is just looking to get back into the swing of things as quickly as possible, every day counts.”
Mr McCarthy added that he thought brokers were the “perfect middle ground between regional borrowers and the fintech market”, given that brokers were aware of, and able to access, online lenders all while providing support to regional borrowers who may be “a little tech averse”.
He highlighted recent research undertaken by Sail, that found 70 per cent of rural business respondents “sometimes or never” chose an online-only bank for accessing financial matters, compared with “talking with a real person”, and almost half of regional and rural small-business owners admitted they feel technology is “changing too fast” for their business, making it difficult for them to keep up.
The research – which surveyed 300 regional businesses in NSW, Victoria and Queensland between 18 November and 2 December – also found that nearly half of SMEs said they would never do business with a company where the entire process was online and there was no person to talk on the phone with.
Moreover, when asked what their biggest concern was about the rapid development of technology in banking and finance, 37 per cent cited the “lack of human contact”.
Mr McCarthy said: “Regional business owners aren’t often in front of a computer, unlike metropolitan SME borrowers. Instead, they prefer to speak to a real person, to get real information and not have to use technology to actually have access to finance.”
While Mr McCarthy added that Sail particularly prides itself on its “personable approach” to online lending, which includes email and over-the-phone support to regional SMEs, he added that the lender also relied on the broker channel for providing face-to-face support for clients.
He concluded: “The findings highlight a clear gap that must be addressed, but also present an opportunity for finance companies and other service providers in their dealings with regional business owners.
“Small businesses make up over 75 per cent of the agricultural industry in Australia, which was the fifth-largest industry sector by GDP last year. We understand that business owners’ time is valuable and limited, so when it comes to a transaction, speed is key, but this should come hand-in-hand with service.
“The research shows us that regional small businesses are crying out for more of a traditional approach.”