It’s no secret that small businesses in Australia are doing it particularly
tough however with freedom among us now is the time to have confidence in an
economic turnaround.
Throughout the pandemic one in four SMEs had been knocked back for bank
finance and of those that did manage to get funding, 29% were negatively
affected by the amount of time taken to organise that funding.
But SMEs are extremely important to the Australian economy.
There are 2.24 million businesses in Australia, and 97% of them are small
businesses employing fewer than 20 people. Small businesses make up 35% of
Australia’s GDP. Businesses have not stopped needing funding to ensure their
growth, but the banks have adjusted their appetite in the area. Furthermore,
with an economic downturn has also meant that businesses are less willing to
offer up property as security.
The difficulty with an economic downturn is that most businesses do not have
the confidence that they can pay back the business loan within a reasonable
time frame and for those businesses that can see light at the end of the
tunnel believe that market conditions have made it harder to access business
funding. However, a business that has the ability to forecast would pay a
higher rate if it meant they did not have to provide real estate as security.
The Productivity Commission released its draft report into competition in the
Australian financial system last year.
It found that a third to a half of the loan value of Australian SMEs was
reliant on property as security. Thirty-five per cent of the value of small
business lending by the major banks is secured by real estate, and for
non-majors this figure is almost 47%.
While small business owners might not know the options available to them,
brokers can help them find alternative lenders that can provide solutions to
meet their needs.
Unsecured business loans do not require any assets as security; instead, the
lender bases its decision on whether the business has the capacity to borrow
against its cash flow performance. Lenders will typically ask these clients
for a personal guarantee, which the lender has the right to pursue if the
business fails to meet its loan repayment obligations.
Unsecured financiers like APICKLE will look at certain data points, including
the company’s time in business and business revenue, as well as reviewing
recent bank statements.
The Team at APICKLE believes that working capital should work with your
cashflow therefore your repayments come from your business transactions.
Pay less on slow days and a little more when sales are strong Pay As you
Earn.
Your business deserves more. You earn the money and we’ll take care of the
rest.
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