A broker poll conducted by Prospa, Australia’s #1 online lender to small business, has revealed managing cash flow is the major reason small business clients seek funding (53%), followed by buying or upgrading equipment (20%), business expansion (12%) and meeting BAS or ATO debt (10%).
Prospa is now urging brokers to prepare for the cash flow peaks and troughs of the end of year period, with seasonal drivers expected to amplify the demand for small business funding over the next four to eight weeks.
Prospa Head of Partnerships Alex Brgudac said:
“Staying on top of cash flow is a tough but essential part of running a small business, especially in the lead up to the holiday season. Depending on factors like industry, location and customer habits, this time of year can be a business boom or tumbleweeds for SME clients – but both scenarios come with cash flow pressures. Prospa research has shown that two-thirds of small business owners feel stressed during the holiday period because of cash flow problems.”
Stimulants for the hospitality and tourism industries include the wedding season, work Christmas parties and racing carnivals, and many businesses in this industry will need to fund extra staff and supplies in preparation for the summer holiday season and New Year festivities. Retailers will be buying extra stock to capitalise on big sales events, such as Black Friday, Click Frenzy and Cyber Monday as they stretch the December buying period back into November. Construction is also in full force to complete the pre-Christmas builds and renovations, as well as lock in new year contracts prior to the trade hiatus in January.
On the other hand, small businesses in CBD locations will be preparing for cash flow squeezes that accompany office closures in late December. Those in the professional services industry may also need funding to cover bills and wages during the quiet period, and to cope with late payments as new work slows down.
Brgudac says that Prospa is already seeing these trends and that brokers should be reaching out now to help their small business clients prepare.
“Brokers need to be aware that small businesses face different cash flow pressures during this time. Now is the time to be talking to your small business clients about their specific funding needs and the solutions available to them. We’ve taken on feedback from small business customers and to help them manage cash flow, we’re offering a six-week period of no repayments that they can take when it suits their business. We’ve also increased our line of credit facility to a maximum of $100,000 to really address those seasonal cash flow needs and give businesses some peace of mind.”
The broker poll was conducted during the webinar ‘Future proof your business: How to help SMEs avoid common business funding traps’, which provided insights from leading broking and accounting specialists on small business lending in Australia.
- Prospa provides cash flow products and services that allow small businesses to prosper
- Prospa has originated over $1.2 billion in loans to date across Australia and New Zealand
- Prospa has over 20,000 small business customers
- Prospa is recognised as a 2019 Great Place to Work and was awarded AON Hewitt Employer of Choice in 2017 and 2018
- Prospa’s Net Promoter Score is in excess of +77
- In 2018 and 2019 Prospa won Australian Fintech Lender of the Year, and achieved a clean sweep of the MFAA Excellence awards in all five States