Only 16% of SMEs think it’s easy to get a loan from a bank, according to the leading independent business index RedZed.
A new report released by small and medium-sized business (SME) lender RedZed has suggested that the vast majority of SMEs are skeptical about getting a bank loan, with just 16% expressing that they think how easy it is to do it.
The inauguration RedZed Independent Business Index gathered this data with insights from 501 self-employed, micro and small business owners from across the country in September and October.
According to RedZed’s findings, 84% of those surveyed believed risk-averse lenders, abundance of red tape and paperwork, credit rating issues, and age of the business were all significant barriers to business. approval of a bank loan.
Despite the downward outlook, business owners in NSW were found to be the most likely to have applied for a business loan from a bank, with almost half (45%) having done so.
This same cohort was simultaneously found to be the lowest in each state for unsuccessful requests (16 percent).
By comparison, a third of Victoria-based bank loan seekers failed to secure a loan.
The report also found that 41 percent of those surveyed said they had applied for a loan before, almost half (47 percent) of men surveyed had applied for a business loan from a major bank, and about a quarter (26 percent) of women who did the same.
This disparity was further highlighted in this inaugural report, with 31 percent of women surveyed saying they had been denied a loan, while only 17 percent of men said they were also turned down.
Additionally, only 22 percent of women polled said they felt confident dealing with financial and financial matters, while 72 percent said they tried to stay informed about financial and financial matters.
For the men surveyed, these figures were respectively 30% and 84%.
However, the same report noted that women surveyed “expressed a clear greater confidence in their business prospects” with a figure of +62, while men surveyed had a collective score of +50.
Yet despite the perceived challenges in securing bank financing, the report also noted that 72 percent of all respondents expressed confidence in their future.
Speaking about the results, RedZed executive director of distribution Chris Calvert said the index reinforces what the lender’s internal data is telling them: that independent business owners are struggling to get loans from big banks.
“Independent business owners find it extremely difficult to obtain loans from large banks… COVID-19 restrictions have impacted small and micro businesses in multiple ways, but while government support, in particular JobKeeper, Cashflow Boost and various state plans have been well publicized, with most independent business leaders weathering the storm using their own cash reserves and accessing their own personal retirement accounts,“ Sir Calvert said.
“COVID-19 has forced business owners to adapt and adapt quickly. Those we spoke to have been able to navigate it so far. While JobKeeper and government support helped those who qualified to some extent, it was not a factor affecting their future prospects.
“It’s their resilience and persistence – being able to say, ‘we’re still here.’ They take pride in still being in business, which gives them confidence in their future business prospects.
This report, however, raises concerns about obtaining loans by SMEs, especially since other data has indicated that SMEs are currently in need of financial support as the country begins to reopen.
Research published by OnDeck Australia earlier this week noted that half of the country’s small businesses are currently running out of stock to take advantage of post-lockdown Australia, while nearly half said their cash flow has been affected. negatively due to COVID-19 regulations.
Last week, Prospa released data concluding that 37% of Australian SMEs currently need an average of $ 46,000 to benefit from Australia’s reopening.
You can read more about writing SME finance in the November edition of The Adviser magazine, available now.
To learn more about diversifying into asset finance and SME loan writing, be sure to attend the SME Broker Bootcamp in 2022.
The free event has limited seats, so be sure to reserve a spot today.
You can register for the SME Broker Bootcamp 2022 here.
[Related: In Focus: Supporting the self-employed]
Sam Nichols is a reporter for The Adviser and Mortgage Business. His reporting has featured in various media including ABC News, SBS’s The Feed and VICE.