Two in Three SMEs Implementing New Funding Options - ScotPac
(08 October 2021 – Australia) Businesses are striving to move past COVID and control elements within their power according to new national research by leading SME non-bank lender ScotPac conducted by East & Partners.
This includes a strong trend towards introducing new types of funding as small businesses venture beyond their traditional funding methods evidenced by use of new funding methods almost doubling since 2020. Only 1 in 3 businesses didn’t source new funding - mainly because their applications were rejected while a worrying 4 in 10 SMEs rely on personal credit cards for business expenses. Non-bank lending and new equity are the fastest growing ways to fund new business investment while use of invoice finance has doubled in the past three years.
Non-bank lending and new equity are the fastest growing funding methods for new business investment, rising by 5% and 6% respectively since the September 2020 Index. Well over a quarter of all SMEs (28.7%) plan to use a non-bank lender for new growth measures. ScotPac’s SME Growth Index is Australia’s longest-running in-depth research on small business growth prospects, polling 1255 small businesses from all states and key industries.
“The latest 2021 SME Growth Index results provide insight into how SMEs are building out of the pandemic, with 66.1% sourcing funding beyond what they usually use. This is a rapid rise from the start of 2021 when only 46% were introducing new funding.
The fact so many SMEs tried new funding avenues shows they realise pandemic conditions are a longer-term proposition that they will have to adjust to” said ScotPac CEO Jon Sutton commenting on the results.
“We’d encourage business owners, particularly if they are relying on personal credit cards, to seek professional advice about more sustainable funding options. Alternatives could also benefit SMEs funding their business from retained profits as reliance on retained profits can hinder growth, especially if you are facing rapid growth” Mr Sutton stated.
“Given the pandemic stresses placed on the SME sector, the onus is on financiers to make application processes and ongoing admin as easy and quick as possible. ScotPac has introduced cutting edge technology that allows us to ‘say yes’ to funding within hours and get capital into accounts within a day or so” Mr Sutton added.