Despite these financially tough times, the majority of small businesses are still choosing to navigate their money matters alone instead of turning to professional advice.
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If your business has cryptocurrency in its investment portfolio, here’s news that might interest you: Australian-based lender FiFit has launched a business loan that lets companies secure funding against their Bitcoin.
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After another tough year for various industries, especially tourism, aviation and the arts, businesses are once again a priority in the 2021 Federal Budget.
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In response to more millennials becoming entrepreneurs over the past year, the Commonwealth Bank has now extended its zero-interest credit card ‘Neo’ to small business customers.‘Neo’ was launched some eight months ago to compete with the rise of Buy Now Pay Later products, and came soon after fellow big bank NAB’s release of its own version of a zero-interest credit card called StraightUp. While this product was initially meant for consumers, CommBank’s latest research suggests younger small business owners are another untapped market. CommBank found that customers aged 25 to 40 made up more than half of all its new business transaction accounts in the last six months. These millennials accounted for 57% of new bank accounts during this period, while Gen Zers (those aged 24 or younger) opened another 10% of new accounts. The research also revealed that the portion of millennials with a side hustle has risen by a massive 40% over the past year. “While it’s been a challenging year for many small businesses, the pandemic did present entrepreneurs with the time and opportunity to start a small business as a passion project or an alternative source of income and we’ve seen many of our new business customers skewing younger,” CommBank’s executive group manager of small business banking, Claire Roberts said.
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At a time when many small businesses are finding it difficult to get approved for finance, the federal government has stepped in with its SME Loan Guarantee Scheme to cut through some of the red tape.This scheme is designed to help eligible small to medium sized enterprises (SMEs) get access to cheaper funding, as it involves the government guaranteeing a portion of eligible business loans - 50% in phase two and 80% in its latest version known as the SME Recovery Loan Scheme. But to be covered by the guarantee, your lender must be approved to partake in the scheme. There are 39 lenders participating in phase two right now:
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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.
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With phase two of the government’s SME Loan Guarantee Scheme in full swing and phase three just released, businesses across Australia now have plenty of opportunity to access cheaper funding to boost their cashflow. Under the first phase, the government guaranteed half of all unsecured three-year business loans of up to $250,000. But under phase two which is set to run until 30 June 2021, the loan terms have been extended to five years, and loan amounts increased to $1 million, with 39 lenders including the Commonwealth Bank and ANZ participating in the scheme. Phase three, known as the SME Recovery Loan Scheme, has also begun as of 1 April 2021, with the caps for loan amounts and loan terms once again raised to $5 million and 10 years. Treasurer Josh Frydenberg said more than 35,000 business loans - over $3 billion of the planned $44 billion - have so far been provided to small to medium-sized enterprises (SMEs) under the scheme.And with over 350,000 businesses now left without JobKeeper payments to cover staff costs, even more may jump on board and apply for a government-backed loan.
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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:
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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.
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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.
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