A survey of Australian small business owners has suggested a quarter of SMEs are missing opportunities because of a lack of funding, highlighting the role emerging alternative finance providers have to play in supporting SME growth.
The inaugural Banjo Small Business Finance Survey, conducted by online small business lender Banjo Loans, found 25 per cent of respondents had missed an opportunity due to finance constraints, yet many SME operators are unaware of the range of finance options available to them.
Awareness of alternative business finance providers by Australian SMEs remains well below their European peers – just 16 per cent of the 850 small businesses surveyed said they were aware of alternative finance providers, compared with 44 per cent in the UK and Europe.
Banjo Loans cited RBA data from 2014 which put the volume of lending to SMEs in Australia at $247 billion – 74 per cent of which was by the four major banks.
“There are still too many hoops to jump through when applying for traditional finance,” said Andrew Colliver, CEO of Banjo Loans and a former senior banker with NAB.
“Too many SMEs rely on cash flow and family debt, and don’t apply for funds from traditional lenders because it’s simply too difficult.”
Just 3 per cent of respondents said they have already used an alternate finance provider. Of these, nearly one in three (30 per cent) rate alternative finance business lenders as providing better service than a bank.
Cost, flexibility and transparency were the main reasons cited by these respondents.
“Lending is a necessary part of supporting investment and growth [and] SMEs are screaming out for more accessible lending products,” Mr Colliver said.
“An innovative alternative finance industry has emerged in Australia, with substantial growth potential to support the funding needs of SMEs."