More than 70% of Australian small businesses believe trading conditions will be strong in the next 3-6 months, but close to 50% say they will require support with cash flow, as revealed by a Zip Business survey which assessed the COVID-19 impacts for small businesses.
Zip Business is a division of the global Buy Now, Pay Later firm, Zip Co Limited.
The Zip Business Survey assessed the financial decisions of 500 Australian small businesses over the last 12 months and measured their confidence in the future.
Zip Business reveals how SMBs survived pandemic
The survey revealed that 66% of small businesses tapped multiple sources of working capital to survive the pandemic and 27% used their savings or accessed government grants.
Significantly, 24% accessed credit card debt. Many also dipped into their superannuation, negotiated bill and rent reductions and borrowed off friends and family.
In NSW and Victoria, the states hardest hit by lockdowns, around 55% of small businesses said that they were either losing money or just breaking even in the past 12 months.
This figure is up 20% on their pre-COVID cash flow position.
Geof Alexander, the General Manager of Zip Business offered insightful views on this aspect.
“Cash flow is a concern for businesses right now. In the pandemic, some businesses flourished while others used their own savings, credit card debt or accessed government grants.”
Zip Business, a friend in need
“Uneven performance makes accessing finance difficult as they struggle to understand the business’ true position. We evaluate a business’ performance based on pre-COVID levels.”
“Assisting businesses in need is the reason we created Zip Business.”
The survey also revealed that BNPL as a payment solution for businesses was still in its infancy with 8% of small businesses having accessed a buy now pay later (BNPL) solution.
“Zip Business empowers firms to restart as it’s all about cash flow and confidence, and we see an opportunity for BNPL to help businesses to recover post-COVID and thrive.”
Zip Business’s Buy Now and Pay Later solutions are flexible and transparent products which are generally available to businesses that need to source working capital quickly.
SMEs can borrow between $1k to $150K, with approval taking anywhere from a few minutes to 24 hours. There is no interest, and payments can be split over four instalments with a small, set fee for an overdue balance or repayment extension.
Accounts can be used to pay bills or invoices at Zip’s network of more than 35,000 merchants or online and instore with Trade Plus‘ latest Tap to Pay and Single Use Card features.
The survey was conducted by Bastion Insights for Zip Business.