SMEs look further afield for finance

A new report has found that more than a third of Australian SMEs would consider looking beyond banks for funding.

2 May 2022 

More than one-third of small and medium-sized enterprises (SMEs) across Australia could be soon veering away from traditional banks, according to new findings released by FICO.

This data – which is included in the US analytics company’s What do SMEs need from their banking providers post-pandemic? report – is derived from an RFI Global analysis of two years’ worth of SME Banking Council surveys, which included responses from 508 Australian SMEs.

According to the results, 38% of the Australian SMEs said they would consider alternative or non-traditional lenders in the future.

The same data also noted that, as of December 2021, 15% of SMEs said they were interested in taking up new borrowing products over the next 12 months.

One explanation for this trend, as suggested by this report, is that SMEs were growing frustrated with the funding process of traditional banks. 

As referenced in FICO’s release, 45% of Australian SMEs expressed that competitive interest rates were a top driver when choosing a lender. 

Speed of access to funds (35%), flexibility in repayment options (32%), digital banking capabilities (27%), and the ease and speed of the application experience (24%) were also listed as key decision factors for SMEs. 

FICO senior director of decision management solutions in the Asia Pacific, Aashish Sharma said that the COVID-19 pandemic put a “sudden, massive burden on SMEs, globally” and that they didn’t believe the banks did enough to assist them over this period.

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