SMEs are growing despite tough economic challenges, ABA reveals

Anna Bligh, Chief Executive Officer at ABA

The Australian Banking Association (ABA) has recently released its 2022 Small and Medium Enterprises (SME) Lending Report, which found the number of SME’s expanded across Australia despite the challenging economic conditions. The number of micro businesses grew 10% to 1.55 million in the year to June 2022. During the same period, small businesses grew 3% to 955,861 after extraordinary growth during the 2021 financial year, by 15% to 931,791.

What are the key highlights of the ABA SME report?

  • Appetite for finance – The appetite for finance has returned to the longer term average amongst small businesses but is growing amongst medium businesses.
  • The total value of outstanding finance to small businesses in August 2022 was just over $142 billion, returning to the medium-term average, after having dropped to under $138 billion in the second quarter of 2022.
  • Lending to medium businesses has increased by 16 per cent, from $281 billion in August 2019 to $326 billion in August 2022.
  • Cash flow – Of those SMEs that intend to take out additional finance, the main reason is for cash flow or working capital but fewer businesses are reporting a requirement to borrow for cash flow purposes. This suggests that cash flow problems are less of a concern than they were a year ago.

The SME Lending Report Report will be shared with governments and relevant stakeholders as the banking industry continues to deliver innovative products and services to customers.

What were the executive remarks on the SME report ?

“Despite the difficult economic conditions in Australia resulting from a global pandemic and a contraction in economic activity during the 2021 and 2022 financial years, the number of SMEs operating in the country have grown steadily,” ABA Chief Executive Officer, Anna Bligh said.

“The rate of growth across all business sizes during the period of the 2022 financial year was larger than the growth experienced in the years leading up to the pandemic,” she said. The SME Lending Report was launched recently at the Small Business Round table. It provides a snapshot of the current economic position of the small business sector in Australia.

Ms Bligh said that The SME Lending Report showed the experience of Small and Medium Enterprises has been mixed during the past year, as they navigate an economic landscape complicated by inflation, rising interest rates and low rates of employment. However, she said business and small business confidence has not mirrored the subdued consumer confidence.

“While the growth of SME lending remains flat, data received from ABA member banks shows that the average value of loans made to SMEs has been increasing drastically,” Ms Bligh said.


Please enter your comment!
Please enter your name here

This site uses Akismet to reduce spam. Learn how your comment data is processed.