SECTOR FOCUS
SME LENDING MPA: What are SMEs looking for when it comes to finance?
ACCESS TO FINANCE
OnDeck Off the back of its research, OnDeck sees that small businesses are spending too much time trying to organise bank funding. It found that 57% of SMEs had to slow or halt normal business activities while they waited for money and 40% were forced to delay debt payments. Lenders like OnDeck are hoping to speed up the process. Burke says while it could take 4–6 weeks to get funding from the major banks, OnDeck aims to provide funding within three days. “In an increasingly competitive environment where Australian SMEs are competing in a global marketplace, this time saving can be the make-or-break factor that gives a business a competitive advantage,” he says.
Bluestone D’Vaz agrees that time-poor business owners are looking for fast and convenient solutions. SMEs need finance for a range of purposes, including setting up a line of credit to assist with cash flow, purchasing business assets or consolidating ATO debt; so they need a flexible
30%
14%
56%
About the same to access finance More difficult to access finance Easier to access finance Sources: Sensis Business Index August 2019
Liberty Equity-One Koutsoumidis says SMEs have always been looking for the same thing: “Quite simply, fast, cheap money. This hasn’t changed, really. Ever,” he says.
Michael Burke, OnDeck
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All anyone wants when it comes to finance is a timely and acceptable solution which meets their needs, Street says; but all too often they are not getting it. He breaks small businesses down into “two camps”: those that have been in an established and performing business, versus those that may be somewhere between a start-up and two to three years old. With a high failure rate of small businesses in their first few years, the provision of credit, particularly unsecured, is a difficult proposition, Street adds. “With access to credit more challenging than it has been in the best part of 30 years, lender credit appetite and policy constantly changing, product complexity only increasing and new lenders emerging regularly, timepoor business owners should be thinking ‘broker’ now more than ever,” Street says.
a traditional bank, he adds.
“In an increasingly competitive environment… time saving can be the make-or-break factor that gives a business a competitive advantage” finance solution which meets all their needs. “Because they often require funding to secure valuable business opportunities, an expedient turnaround on their application is critical,” he says. As SME owners do not always fit into the standard documentation requirements, many are left looking for a lender who will assess them on a case-by-case basis and accept a wider range of documentation than
Thinktank
What is changing, however, is the market; Koutsoumidis observes there are more participants entering and the existing participants are broadening their offerings and searching for their own point of difference in the marketplace. Taking a more positive view on the SME lending space than some others, he adds: “The supply of credit in this space is adequately meeting demand.”
Recognising the need for fast decisions, Liberty has placed an increased focus on that. “Our turnaround times are industry-leading,” Mohnacheff says. “We offer 24-hour turnaround times and direct access to underwriters so that brokers can be sure of a smooth and speedy process.” To make things easier for brokers who are looking after small business clients, Liberty is building a dedicated business lending department to support the channel. “We’re committed to helping more businesses to get financial with Liberty and this continues our unmatched record of innovation which will again lay a path for others to follow,” Mohnacheff adds.
MPA: According to the Sensis Business Index, SMEs are finding it increasingly difficult to access finance. What are you doing to help these borrowers? In the August 2019 Sensis Business Index, 30% of businesses in Australia said it was harder to access finance now than it was six months ago.
www.mpamagazine.com.au
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Source: Sensis Business Index August 2019
24/10/2019 9:06:56 AM
Im req em app