What do nine million Australians have in common? They’ve all dreamed about becoming their own boss by starting a small business.
That’s according to new YouGov research commissioned by the Australian Banking Association (ABA), with the research also revealing the major hurdle many would-be owners face in getting their small business up and running: finance.
YouGov found that 60% of people wanting to start their own small businesses said that access to money was the biggest factor holding them back - higher than ‘life circumstances’ (42%) and a lack of experience (36%).
There is some good news for Aussies looking for a business loan to kickstart a new business though.
According to Australian Banking Association CEO, Anna Bligh, banks currently have an application approval rate of 94% which, combined with the current low interest rate environment, means that now could be a great time for businesses to apply for a loan.
However, in what may be a surprise given the high percentage of successful applications, business loan applications through banks have actually fallen by some way since 2014.
“Small business loan applications have declined by a third (33 percent) since the 2014 calendar year. Encouragingly, there has been a lift in the June quarter. It’s early days, but we hope that it will continue,” said Bligh.
“There could be many reasons for the downturn, including believing that they won’t get a loan, thinking it takes too long, deeming the application process too complex or they’re simply borrowing money from other sources.”
Rise of the ‘challenger’ lenders
So who are these ‘other sources’ that small businesses are turning to?
Over the past five years a number of challenger lenders have entered the Australian business lending space, offering a competitive, online alternative to banks.
According to GetCapital CEO, Jamie Osborn, lenders like GetCapital have been able to leverage technology and data to better serve the needs of small businesses, precipitating a shift away from banks.
"Banks have optimized their business models around mortgage underwriting. This means that their credit underwriting process is centered around property security and the application and assessment processes are long and arduous, with lots of paperwork. This model doesn't work well for small business owners,” he said.
“A handful of challenger brands in the business lending category, such as GetCapital, have taken a different approach, by building a product and service offering from scratch to meet the specific needs of small businesses.”
“Small businesses want a fast and efficient application process, a credit decision based on the strength of their business rather than the size of their family home, and lending products that fit their specific requirements and a high level of service.”
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Ready to kickstart that dream by finding a business loan of your own? Check out some of the hottest offers around (including Get Capital’s offer) below, or head over to the Mozo business loans comparison hub for even more deals.