Small business demand for alternative lenders

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16 January 2024 | 3 min read

By better understanding small business demand for alternative lending options, brokers can boost their business and improve service delivery for clients. 

At a glance

Here’s a snapshot of the article’s insights:

  • Consider how small business owners are becoming increasingly aware of and willing to approach alternative lenders.
  • Sole traders may be more aware of alternative lenders than more established businesses.
  • “A key driver for consideration of an [alternative] lender over an established institution is the quality of the overall customer service,” says Roberto Sanz, Director of Sales and Partnerships at Prospa.
  • Consider using Prospa’s marketing resources and tools to help guide your approach.

Australian small business owners are becoming increasingly aware of the financing options available via alternative lenders such as Prospa – and brokers are well-positioned to make the most of this opportunity. 

Appetite for funding 

According to research commissioned by Prospa in September 2023, 54% of small business owners are aware of at least one alternative lender providing services to clients.* 

Further to this, 23% of small business owners are highly likely to consider an alternative lender when investigating borrowing options. That’s up from 19% in June 2023 and from 17% four years ago. 

It’s also worth considering which segment of the small business audience may be most amenable to considering borrowing options from a non-traditional lending institution. 

Sole traders are most comfortable with taking out loans from alternative lenders such as Prospa, with 31% of sole trader respondents saying they were highly comfortable with non-traditional providers. 

This compares to 18% of established small businesses. 

At the same time, larger businesses are more likely to take up a borrowing product in the next 12 months. 

So in the larger scheme of things, new business could await in many different directions, and clients of various sizes are seeking lending solutions in some form. 

To-do list 

Here are some suggestions for how to approach your next meeting with clients: 

  • Introduce the option of approaching a non-traditional lender such as Propsa. 
  • Remember that sole traders may be more aware of alternative lenders than more established businesses. 
  • Don’t dismiss a business based on size, type or borrowing history – any business could be interested in a lending opportunity, and at any time.

Making a difference 

According to Roberto Sanz, Director of Sales and Partnerships at Prospa, the formula for successfully connecting businesses with funding is threefold. 

“The mortgage brokers who make up 54% of our referred business this year are doing three things well: creating appetite, raising awareness and providing access,” he says. 

“We know they understand where the appetite for funding is because they’re consistently identifying their clients’ additional needs. 

“They’re using [Prospa’s] marketing resources and tools to drive awareness within their own databases and referral networks to position themselves as true financial advisers and they are working with our BDMs [Business Development Managers] to find the best funding solution for their clients.” 

One of the main reasons a customer may approach an alternative lender, says Roberto, the standard of customer service provided to them. 

“Brokers need to understand their customers’ cash flow cycles, identifying the pain points along the way,” he says. 

“Can their customers realise their opportunities with a Prospa Small Business Loan or reduce cash flow gaps with a Prospa Business Line of Credit?” 

The most important thing for brokers to focus on is starting the conversation. 

“With the mortgage cliff bringing more bums in seats for discussions about refinancing options, mortgage brokers can start identifying their clients’ additional needs by asking some simple questions,” says Roberto. 

Those questions can lead to growth opportunities for your own business and that of your clients. 

To-do list 

  • Creating appetite, raising awareness and providing access is the trifecta for setting clients up with a funding solution. 
  • Consider using Prospa’s marketing resources and tools to help guide your approach. 
  • Nothing will happen if you don’t start the conversation – so reach out and see what happens. 

RFI Australia SME Banking Council, September 2023 

Enquire about becoming a Prospa Partner and get ready to watch your business – and those of your clients – grow. 

The information in this post is provided for general information only and does not take into account your personal situation. Nothing contained in this post constitutes advice or an endorsement or recommendation of any kind by Prospa. Any links to third party websites are strictly for informational purposes only. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisors. Although every effort has been made to verify the accuracy of the information as at the date of publication, Prospa, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information for any reason, including due to the passage of time, or any loss or damage suffered by any person directly or indirectly through relying on this information.