It’s been a challenging year for the small business sector. With the end of the June quarter now here, Australia is only days away from the official calling of a recession.
While SMEs are likely to feel the brunt, the opportunities for brokers are clear, as recent data from OnDeck shows.
A recession could be more challenging than COVID-19
In a recent survey of more than 300 Australian SMEs, OnDeck found that over eight out of ten (86%) have been impacted by the pandemic, while close to half (47%) have seen revenue fall.
Despite social lockdown restrictions easing across the country, SMEs are facing another threat, with six out of ten saying a recession would likely have a negative impact on revenue.
Early in the month, treasurer Josh Frydenberg confirmed the country was already in a recession, with June quarterly figures expected to show a second contraction after the economy shrank by 0.3% in the leadup to March.
Less than half of SME’s take a proactive approach
With 51% of participants reacting to events as they occur and one in five waiting to see how other businesses react before responding themselves, the data shows a good proportion of SMEs aren’t on the front foot when preparing for economic downturns.
OnDeck Australia national broker channel manager Robbie Fidler says brokers can offer critical support.
“Cashflow is critical to all businesses – and never more so than during rough patches. The challenge for SMEs lies in accessing funds,” he says.
The data confirms this; six out of ten participants say access to cashflow would help them better navigate a crisis.
How brokers can help
The catch 22 to this situation is that a quarter of SMEs have reported being knocked back after applying for business finance in the past while almost one third have been negatively impacted by the time taken to secure funding.
“This is where brokers can really lend valuable support to their SME clients,” says Fidler.
“For time-poor SME owners, it may seem the easiest option to approach their regular bank for finance. But that doesn’t always end well – and business owners simply may not be aware of other funding options.
“As dedicated finance experts, brokers are able to cast their net wide to help their SME clients access sources of funding they may never have considered.
“The result can be a win-win for everyone – the small business secures the funding it needs to survive an economic slowdown, and the broker is able to grow and diversify their own business revenue.”