SECTOR FOCUS
SME LENDING
Non-banks to the rescue As the challenges for small businesses trying to gain finance increase, six non-banks are providing alternative options. They talk about their drive to help SMEs and how they are working with brokers to do so MPA: What are the challenges currently facing small businesses?
flow and less on hard assets as security, while providing an easier, faster and better process.
OnDeck
Bluestone
Online lender OnDeck conducted research into small business customers and found that two out of five SMEs have sought finance in the past, but almost one in four have been knocked back by their bank. “Australian small businesses employ around 4.5 million Australians and account for 33% of private industry value add across Australian business – yet are often neglected by traditional lenders as being too risky or not asset rich enough,” says Michael Burke, head of sales at OnDeck Australia. He adds that technology is changing the way the market thinks about business loans and this allows specialists like OnDeck to provide a solution to SMEs focusing more on cash
For small business owners that require a loan, one of the main challenges is the type of documentation required to prove their revenue. While PAYG borrowers generally only require their two most recent payslips and personal bank statements, self-employed borrowers need more extensive documentation to assess the same types of loans. “Self-employed borrowers applying for a loan through a mainstream lender usually require two years of tax returns, a notice of assessment from the ATO, and in some cases, their business bank records to show cash flow,” Royden D’Vaz, head of sales at Bluestone, says. “Unfortunately, for many SMEs this is not always possible, for example if borrowers
have not yet completed their latest returns or have traded for less than 24 months.”
Equity-One Managing director at Equity-One, Dean Koutsoumidis, agrees that while running a small business has always had its challenges
ONDECK’S RESEARCH
According to research by OnDeck, delayed access to finance has the following impacts:
57%
normal business activities were slowed or halted
28
42%
had to delay the delivery of products/services
40%
were forced to delay debt payments
39%
had to delay buying new equipment
12%
were forced to postpone hiring new staff.
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