Small-medium sized enterprises (SME) are at risk of experiencing business interruptions long into the new year courtesy of thinly stretched personal finances in conjunction with crippling droughts and the nation’s worst bushfire season on record.
The Christmas and New Year period is traditionally a tough time from a trade perspective, with Australians spending an estimated $28 billion on credit cards in December, leaving many SME’s with fewer back-up resources to support their working capital needs.
With that in mind, leading online SME lender OnDeck is urging brokers to support their small business clients this January, as many SME owners rely on the help of family members and credit cards to meet the cash flow needs of their small business.
That’s evidenced by figures outlining that 25% of SME’s that have applied for business finance with a bank have been rejected.
OnDeck Australia chief executive officer Cameron Poolman said that many small business owners turn to family and friends or personal credit cards when they’re rejected for finance by mainstream banks.
“However, they may find that both avenues are fruitless at this time of year,” he said.
For many Australians, the New Year sees a tighter focus on their personal finances as they recover from higher spending throughout the festive season.”
In addition to Australians spending an estimated $28 billion on credit cards in December, 37% of cardholders, which is the equivalent to 7.2 million people, are expected to still be repaying their Christmas debt through 2020.
Brokers play a vital role in helping their SME clients understand that alternative funding options are available. OnDeck’s research confirms that one in three (33%) SME owners believe the lending options available to small businesses are expanding, and one in five (22%) would consider using an online SME lender such as OnDeck.
“We know that typically, one in four of a broker’s home loan clients are SME owners. This gives brokers an excellent launch pad to support SME owners navigate the cash squeeze that January often brings.”, Poolman said.
Evolving into SME finance can be the means for Australian brokers to diversify their business in 2020. OnDeck recorded 70% growth in broker-generated loans over the past year, and offers significant support to brokers to grow their SME loan book including white label marketing materials and an expanded broker-facing team.
Poolman said access to capital is the single biggest factor holding small business back in Australia.
“Brokers can support their SME clients to achieve business growth by partnering with online lenders such as OnDeck, which may be able to source the funds they need to take advantage of timely opportunities for business growth,” he said.
“This also enables brokers to deliver value-added services as it preserves the important line between business assets and liabilities, and personal financial resources.”