By Phil Ringuet
Ever thought about taking out a loan for your business but hesitated because you were worried about meeting your repayments? Don’t worry, it’s a common concern. But some promising data has just come out that might help you put those fears aside.
You gotta spend money to make money, so the saying goes.
But what if your business’s cash flow has been heavily impacted this year due to COVID-19? What options do you have at your disposal?
Well, according to the Australian Banking Association’s latest report, $10 billion in new lending was made to small businesses in the three months to August 2021 – a 26% jump ($7.9 billion) on last year.
Which means as many as 50% of SMEs now hold a borrowing product of some sort.
So while taking out finance for your business might feel daunting, rest assured it’s something most businesses do, and there are a range of different finance products and options available to suit businesses of all shapes and sizes.
How difficult do most businesses find it to pay back loans?
So, here’s the good news.
Despite the difficult business conditions during 2021, just 1-in-6 small businesses (16%) found it difficult to meet their financial commitments.
That’s opposed to 41% of SMEs that found it “easy” or “very easy”, while 36% were indifferent.
And many of these businesses are taking out finance to help keep their doors open and operations running smoothly.
The top reason small and micro businesses gave for recently seeking finance was to ‘maintain short-term cash flow or liquidity’ (about 50%), while the second most common reason was to ‘ensure survival of the business’ (about 40%).
Replacing, upgrading or purchasing equipment or machinery came in third (20-30%).
Want to explore your finance options?
The SME lending space is an evolving one, with a surge of new lenders and products recently hitting the market.
And as brokers, we’re constantly upskilling and learning to make sure we stay abreast of the expanding options available to small business owners.
An Important Message
While every effort has been made to provide valuable, useful information in this publication, this firm and any related suppliers or associated companies accept no responsibility or any form of liability from reliance upon or use of its contents. Any suggestions should be considered carefully within your own particular circumstances, as they are intended as general information only.