US-headquartered lender Square has just announced plans to expand its business loan product to Australia, in an effort to reduce the red tape around accessing additional working capital. Square’s decision to move beyond its domestic market came in light of its own research. Its survey found that more than half of Australian businesses have been negatively impacted by COVID-19 and yet only 1 in 4 business owners have accessed formal forms of finance like business loans. Meanwhile, a far larger portion of respondents - two-thirds - have relied on more private sources of funding, such as personal credit cards or borrowing from family and friends.“It’s no secret that small businesses in Australia have historically faced huge hurdles when it comes to accessing formal forms of finance,” said Square Australia’s head of industry and payments, Samina Hussain-Letch.“They’re often forced to pour over piles of paperwork, provide years of financial information, and put up personal guarantees that can be riddled with red tape.” So, what’s the solution to these barriers? That’s where Square Loans comes in.
After a tough year, many small businesses are looking to transition out of survival mode and begin growing their operations again. In these times of economic uncertainty, managing the ups and downs of your business’ cashflow can be made easier with the right banking products under your belt.Whether it’s a business loan to help fund ‘big ticket’ purchases such as stock or new equipment, a credit card to cover smaller cashflow shortages, or a bank account to keep track of all your business transactions, you’ll have plenty of attractive offers to sift through.So to help you shop around, here are our editorial picks for top business loans, bank accounts and credit cards available to Australian businesses right now. Read on for a snapshot of their key features.
In a bid to support small business recovery after JobKeeper, all of Australia’s big four banks have started offering low rate business loans of up to $5 million since April 1.These loans are available through the government’s new SME loan guarantee scheme, which has been expanded and extended for the second time since its introduction back in March last year. Now in its third phase, the scheme is open to the following businesses:
JobKeeper and other government support such as the NSW commercial lease package have officially ended. For many small businesses, a big question now is how they'll be able to manage dips in cashflow as a result of withdrawn financial relief. According to recent research from Scotpac, when it comes to plans for recovery and growth for the rest of 2021, 65% of small to medium enterprises (SMEs) want to restructure their business. That includes looking for other avenues of funding.Among those surveyed, 20% SMEs said they will need to cut costs to balance out the loss of stimulus funds. Nearly 20% are looking to make arrangements with the Australian Taxation Office, while about 16% plan to apply for a business loan. Unfortunately, another 25% of respondents said they have no strategy to get back on track. There are also more SMEs than last year who said they may have to shut down or sell their business if the market doesn't significantly improve - 34%, up from 31% in 2020. These figures were based on a national poll with 1,253 small businesses, conducted as part of ScotPac’s biannual SME Growth Index. Scotpac’s chief executive, Jon Sutton said that while there are a few “green shoots” indicating that the small business sector has withstood the worst of the pandemic, “the recovery is uneven and varies significantly by state, region and industry”. “Many businesses are forecasting growth, but many are not out of the woods yet,” he said. On the one hand, according to ScotPac's survey, 44% of SMEs feel more confident about running their business compared to pre-COVID, and about 55% have expressed plans to invest in growth over the next six months - up 3% since late last year. Scotpac’s SME revenue growth forecast is also up eight points for the first half of 2021. On the other hand however, Sutton said a lot of small businesses continue to do it tough. “There are positives, but we have to be realistic about what lies ahead. We still have half of the businesses polled this round, saying they are not yet ready to invest back into their business,” he said.
In this day and age, words like ‘side hustle’ and ‘entrepreneur’ have generated a lot of buzz, as a growing number of people look to earn extra cash or kickstart a passion project outside of their day job.In fact, recent ING research found that nearly half (48%) of all Australians have a side hustle or are planning to start one. But while social media and online marketplaces have made it more accessible for people to start their own businesses, whether it’s an Instagram bakery or an Etsy art store, statistics show a gender imbalance still exists in the realm of entrepreneurship. For instance, as reported by SBS, of the 355,000 startups that were registered in Australia in October last year, only 22% were all women-led. That figure has only risen by 3% over the past two decades. Susie Jones is the co-founder and chief executive officer of Cynch Security, a Melbourne-based cybersecurity business. As an entrepreneur herself, Jones says women face more barriers than men when founding their own businesses. One barrier is the gender pay gap. Since launching a startup will usually require a certain amount of capital upfront, Jones says “fewer women are in a starting position to take the financial risk of founding a startup.” She adds that it’s also been well-documented that investors are less likely to invest in female-founded startups. Plus the fact that women are still expected to bear more responsibility in the home means “they simply have less time to dedicate to a startup”, says Jones. Case in point: Mozo’s Pink Recession report found that 83% of women generally act as a primary carer for their children compared to just 17% of men. Given how daunting it can be to start a business especially in the context of those additional challenges, it certainly helps to hear from others who have been in your shoes. So, we spoke to two women entrepreneurs about their journeys of growing their ventures to the thriving small businesses they are today, and the lessons they’ve learned along the way.
With the end of JobKeeper approaching in just over two weeks, the federal government today announced it will be extending its loan guarantee scheme for small businesses, in an effort to boost economic recovery. The new scheme will see the government guaranteeing 80% of business loans issued by participating lenders to small to medium-sized enterprises (SMEs), instead of the current 50%. Under the scheme, SMEs could take out much larger loans of up to $5 million over a longer period of ten years. And instead of a six-month repayment holiday businesses can opt to pause their loan repayments for 24 months. Another important change is that the new version will cover refinancing, which means SMEs may be allowed to switch to a better interest rate available under the scheme as well as access other benefits like longer loan terms. “The SME Recovery Scheme is part of the next step in our plan to help small businesses stand on their own two feet as the economy recovers from COVID-19,” Treasurer Josh Frydenberg said.“The expansion and extension of the loans will back businesses that back themselves and will help businesses who continue to do it tough build a bridge to the other side of the crisis and keep their staff employed.” To be eligible, businesses must have been on JobKeeper between 4 January and 28 March. Applications open from 1 April 2021 and must be approved before 31 December 2021. The government expects that over 350,000 JobKeeper recipients will qualify for this new scheme. Australian Banking Association’s chief executive, Anna Bligh welcomed the extension, saying it will give Aussie businesses the funding and backing they need.“This is the right product for the times. It includes more flexibility, and will allow small businesses to re-stock, rebuild and recover,” she said.Council of Small Business Organisations Australia’s chief executive Peter Strong also voiced his support. “This sends a message to businesses that wish to perhaps expand their manufacturing base, or those businesses that are still going through a difficult time but know they have a viable, that they can go to their bank and openly discuss their situation,” he said. For more COVID-related resources, visit our guide where we cover the many financial support measures available to your household and small business. Or scroll down below to start comparing a few business loan options.
Small business survival over the past year has hinged on resilience, with many owners and entrepreneurs embracing digital solutions to navigate the fallout from COVID-19 restrictions. Shirley Yuan, who runs a Sydney-based jewellery store Shirley and Owen, was one such business owner who had to close up shop for three months during the 2020 lockdowns.But she said that those tough times gave her an opportunity to pick up new skills. “I bought a small light room to take photos of my jewellery for my customers. I also learnt a bit of marketing from my daughter. It amazed me that there are so many ways to do advertisements through social media,” she said. Yuan is not alone. According to new data from women’s community group Business Chicks, 65% of women business owners have been investing more in online marketing since the pandemic. More specifically, around 24% of women business owners are spending more on social media ads. Meanwhile 20% have increased their spend on IT/tech support, 19% on creative/design software, 15% on email marketing, and 7% on their Customer Relationship Management (CRM) platforms. Virtual chat/video streaming as well as learning and development have also risen in priority, with 25% and 29% respectively spending more on these areas. Out of the survey’s 586 Aussie women participants, nearly a third are now their own bosses. About 13% have started their own business while still working for someone else. “Record numbers are now running their own show and looking at ways to expand their business,” Business Chicks’ content and marketing manager, Brion Hunt said. “We are seeing a lot of SMEs re-examine their core offering, how they deliver it and how they reach and talk to their clients,” Business Australia’s general manager of content and acquisition, Genevieve Brock added.“That has prompted [businesses to] re-examine their marketing strategies as well,” she said.
American Express is well known for its range of credit cards for the average Aussie or business owner. However, the credit card giant has now decided to move beyond plastic and enter the business loans market - a first for Amex outside of the United States. The decision to take on a new credit product like business loans came as a response to the rising number of small to medium enterprises (SMEs) planning to take out more than $130 billion of additional capital this year. “Many businesses are still feeling the full impact of the Covid-19 crisis, while others have rebounded with their sights firmly set on growth. We have taken a transformational step to evolve our business beyond our existing card offering to help support businesses on their journey forward,” said vice president of Global Services for American Express, Martin Seward. In order to make these loans a reality, American Express partnered with global organisations platform, ODX. “Given the dramatic shift in customer needs and preferences during the pandemic, it’s more important than ever to provide them with a digital and frictionless experience to tap into financing,” said president of ODX, Brian Geary. Jumping into the details, the American Express Business Loan will feature:
If savings is on your agenda for 2021 or you simply want to manage your money more effectively as a small business owner, it pays to shop around to find the best banking deals out there.With so much on your plate running your small business, the less you need to worry about your banking the better. But the question begs, are you making the most of your money?With factors like hidden fees, employee wages, cash-flow and much more to consider, shopping around will benefit the way you operate in the long run.“By not shopping around you could be throwing thousands of dollars down the drain,” said Peter Marshall, Mozo Experts Choice Awards judge. “With savings rates at such low levels, it’s more important than ever to proactively manage your accounts and get the best deals you can. In these awards, we compared and found that there was a vast difference between the lowest and highest interest rates of business accounts.”And the crown goes to…
Small Business Ombudsman Kate Carnell has renewed calls for the federal government to provide HECS-style loans to businesses to help them stay afloat once JobKeeper ends in March.These ultra-low or zero-interest business loans would be government-funded and help boost cashflow, and similarly to the student HECS-HELP loan, would only be repaid once the business hits a certain agreed level of revenue.Carnell says that “somewhere between 25-30% of businesses are still really struggling.”“[That may be] because of the industry that they’re in, border closures, shutdowns, COVID requirements - a whole range of reasons why they’re not recovering at the same sort of rate as other businesses,” she says. “There are some [businesses] that are tracking in the right direction and they will be alright, but there needs to be an option for those that aren’t.”