A study of over 500 SMEs, conducted by research company RFi Group in December 2020, has revealed that the majority (60%) of small business owners in Australia who experienced negative impacts as a result of the COVID-19 pandemic expect to recover within the next 12 months.
When asked how long they think it will take for their business to return to the level it was at prior to the COVID-19 pandemic, 60% of respondents said they believed this would occur within 12 months. This increased to 93% expecting to recover within the next 2-3 years or earlier. Only 2% of SMEs surveyed believed their business would never recover.
The proportion of SMEs who did not feel confident about the future of their business over the next 12 months dropped significantly to just 8% in December 2020, down from a high of 16% in September 2020.
In a positive sign for brokers in the SME lending space, the number of SMEs intending to take out a borrowing product in 2021 has increased significantly to 1 in 4 SMEs (24%), up from of 18% in June 2020.
The research shows business confidence is a strong factor in borrowing intentions, with 74% of those intending to take out a borrowing product also highly confident in their business’ future over the next 12 months.
Borrowing intentions were also closely associated with plans to invest in the business in the next 12 months, with intent to take out a borrowing product higher among SMEs that intend to invest in digital software (49%), recruit new or more skilled employees (46%), add sales channels (42%), and expand geographically (43%). 32% of SMEs intending to invest in equipment and machinery intend to take out a borrowing product.
Beau Bertoli, co-founder and Chief Revenue Officer at Prospa, Australia’s number one online lender to small business, says the research clearly highlights the exciting opportunities for brokers re-emerging in the SME lending market right now.
“The study absolutely draws a clear link between a boost in confidence, plans for growth and intentions to borrow. Small businesses are increasingly looking for capital and our own data and originations trajectory reveal the same trend. Given the pent-up demand from the last 12 months, this is a crucial time for brokers to be talking to SMEs about their business plans and the funding options available to them.”
“When businesses can’t access the capital they need quickly, they can remain in a state of limbo, and in some cases, even go backwards. That’s not what our economy needs right now. We know small business growth opportunities are often short-term, so we combine speed with personalised service and flexible solutions, including flexible early repayment options. We can deliver a response and funding in 24 hours, and don’t require asset security upfront to access Prospa funding up to $100,000.
“We have the tools, resources, and credit appetite to help brokers capitalise on this shift in the SME mindset and I urge our partners to act now. For brokers out there that may be new to the SME lending space, we can also help you identify potential SME clients in your existing database and have a team of BDMs available to talk through your scenarios today.”
Prospa Group Limited (ASX: PGL) is a financial technology company and a leading provider of cash flow products and services that help small businesses to grow and prosper. Headquartered in Sydney, the company operates across Australia and New Zealand and employs over 200 people. Prospa has a Net Promoter Score over 77 and is ranked #1 in the Non-bank Financial Services category in Australia and New Zealand on TrustPilot. The company has been recognised as the MFAA National Fintech Lender of the Year three years in a row and received the Excellence in Business Lending Award at the FinTech Australia Finnie Awards 2020.
About the Research
Fieldwork for the Australian SME Banking Council was conducted by RFi Group in December 2020. In total 501 SMEs were interviewed between the 11th December 2020 and the 29th December 2020. SMEs have been defined as businesses with less than $10 million AUD annual revenue and data has been weighted by turnover to be indicative of the Australian SME market. Industries include wholesale trade and warehousing, professional services, construction, manufacturing, retail and hospitality.