The ongoing struggle for SME funding

A recent industry study* has shown one in four SMEs is unsuccessful in obtaining funding, with the majority being turned away by major banks.

And that’s a whole lot of cries for help that have fallen on deaf ears, particularly when you consider nearly 50% of Australian SMEs sought funding in the last 12 months as they struggled with the fallout from an economically tumultuous year.

Not surprisingly, easing working capital constraints was cited as the primary purpose for sourcing new funds by 70% of SMEs. For businesses with a turnover of between $1 million and $10 million, that figured jumped to over 80%, many of whom also reported experiencing a regular cashflow shortfall.

These are extraordinary findings in light of the tremendous amounts of financial stimulus provided by the Government via the banks and other financial institutions designed to support small businesses in the wake of the pandemic.

If you’re a SME and you’ve had a disappointing experience at the hands of the banks, be reassured that there are second tier specialist lenders out there who can help and are leveraging Government funding to ensure positive outcomes for customers, whether you are experiencing cashflow shortfalls or shifting into a growth phase.

As a participating specialist lender in phase 2 of the SME Government Guarantee (SMEGG) Scheme, we saw firsthand how a low-rate fast turnaround funding option was snapped up by small businesses who relied principally on the strength of their recurring revenue streams (rather than property assets). $1 million can go a long way to making or breaking an SME starved of working capital or looking to invest for growth.

We expect to see the Australian Treasury continue to provide stimulus for the SME market as simply cutting the safety net supporting small businesses coming out of COVID could lead to a massive freefall for many who are currently delicately poised on the highwire. Watch this space for further details of some of the interesting highwire acrobatics that may emerge in the next few months…

*2021 Small-to-Medium Enterprise (SME) Banking Insights Report by East and Partners

SME Government Guarantee Loan