SMEs seek support to secure funding for growth and COVID recovery

Linden Toll CEO of Apricity Finance

Small businesses hit hard by the COVID-19 pandemic are seeking stabilisation of their finances and the ability to lay strong foundations in the coming years.

This is according to Apricity Finance, upon releasing its new research into the small business sector conducted in the last week of April 2021 by YouGov.

The research shows that of small business owners

  • 12% applied for finance since the outset of the pandemic in March 2020 until April this year
  • 12% figure is from the broader total of 39% who said they had either sought finance in the past year, or are planning to in the next two years
  • A similar proportion of businesses who have or intend to seek funding needing it to simply stay afloat (45%), as those who have used or plan to use it to fund growth (44%)
  • While the Big Four banks remained the most common source of funding, 22% were not aware of any alternative finance sources outside other traditional lenders such as smaller banks, credit unions, and building societies
  • Less than four in 10 (38%) say they are confident they could secure additional funding for immediate needs; while as many as 15% say they are not at all confident.

“SME research helps to gain a clear picture of the growth and funding outlook for this vital sector, and is a gauge of overall economic trends,” said Apricity Finance CEO, Linden Toll.

“Small business is the essential driver and engine room of the Australian economy, so assessing where these businesses can best use support, whether from the Budget and government policy or through alternative funding options, is key to enabling their growth.”

“The ability to access a secure stream of funding to support the current vital stage in business resurgence is key to achieving a stable recovery,” Mr Toll said.

What is the impact of this Apricity Finance research?

Mr Toll’s views accord with other insights from the research, which asked SMEs to identify their top two preferred government measures as part of a “Budget wishlist”.

The top-ranking answers were greater stimulus across the whole economy as distinct from sector-specific initiatives (48%), and more tax relief (46%).

“The boost in stimulus for the infrastructure sector, and the extension of the asset write off is good news for many SMEs,” said Mr Toll.

“There was a lot of initial excitement about the infrastructure stimulus in last year’s Budget, but the very high surety bonds and bank guarantees required to participate in most projects formed an instant barrier to entry.”

“This issue needs to be addressed if the SME sector is going to benefit from these new infrastructure projects.”

The research also showed that, of those who have sought or would seek secured finance, 63% have used or would be willing to use their own properties (family or private home) as security.

“It’s our view that these findings show a continued perception that accessing home equity is the easiest way to secure finance.”

“Couple this with new rules enabling access to higher amounts of super for home ownership and we may be looking at a situation where Australian small business owners are putting their personal security on the line to fund their business, despite this not being the only option.”

The research found that established businesses (10 or more years old) with an annual turnover of more than $500,000 are more likely than those with less to have used or to be aware of alternative funding sources other than the Big Four banks.

However, more than one in five (22%), the equivalent of more than half a million small business owners, are not aware of any alternative sources of financing.

“We are happy to see that awareness of alternative finance is higher among experienced businesses. The knowledge gap among newer players may result in missed opportunities.”

“Ensuring small business is made aware of the options could be a game changer, especially for those who continue to struggle with funding for growth,” said Mr Toll.

This online survey into Australia’s small business financing habits and intentions was conducted by YouGov, on behalf of Apricity Finance between 16th – 23rd of April 2021.

The national survey canvassed a sample of 503 business owners with less than 50 employees.

Apricity Finance supports small businesses, and provides secure credit services to enable approved SMBs to receive prompt payment for invoices to high credit quality customers.