Delays in financing is stunting growth for Aussie small businesses, GetCapital research finds
Article by Kelly Emmerton
Many Australian small business owners rely on external financing to fund business growth, but drawn out application processes and insufficient credit could put development on hold, according to new research from GetCapital.
GetCapital's inaugural SME Business Credit Survey is the first of its kind and looked at how Australian businesses with up to 500 employees access and use credit.
The results showed that 43% of SMEs relied on credit to fund business growth - from hiring new employees, to launching new products or services. A further 30% used external finance for day to day expenses, such as managing cash flow or fulfilling existing contracts.
But according to GetCapital’s survey, a massive 61% of the SMEs which were approved for funding in 2015-16 didn’t receive the full amount they asked for. What’s more, for 74% of SMEs the search and application for credit took upwards of 6 hours - for 15% it could take more than 20.
This can have serious impacts on the running of small businesses. For 33% of SMEs, not securing the necessary funding from outside sources meant the expansion of their business had to be put on hold, and 17% didn’t hire new employees. A further 28% reported being delayed or prevented from meeting current orders or contracts thanks to insufficient credit.
GetCapital CEO, Jamie Osborn said, "When it comes to accessing credit, the ability to secure financing in a timely manner is critical to the success of every small business.”
“Long application time frames for finance means wasted time, missed opportunities and delayed projects - all of which impacts an SMEs ability to grow. In the digital age, no SME should be spending up to 20 hours searching for credit."
Other barriers that held SMEs back from applying for funding included poor business performance (32%), being underprepared with financial documents (22%) and feeling they didn’t have enough collateral for a loan (34%). Interestingly enough, 34% of SMEs that successfully secured credit did so with no collateral at all.
“For small businesses, securing cost-effective, reliable funding can be a make or break issue,” Mozo Director Kirsty Lamont commented.
“It’s really important that small business owners understand not only what they need to do to apply for financing, but also how to find the option that best suits their needs and situation.”
Looking for financing that suits your small business? Head over to Mozo’s business loan comparison table to compare available options around in no time flat.