Small businesses in Australia are increasingly engaging the services of non-bank lenders to meet their modern and changing needs.
SMEs Turning to Non-Bank Lenders for Flexibility
Statistics from the recently released SME Growth Index from ScotPac show that small-to-medium enterprises (SMEs) are shifting away from traditional bank lenders when planning finance for their investments and enterprises.
The report shows a jump in the last 12 months from 47 per cent up to 54 per cent of SMEs that are looking at non-bank lenders for their borrowing in the next six months. On the flipside, a steep drop from 47 per cent down to 35 per cent was recorded for SMEs planning to stick with traditional banks over the same period.
Growth-Driven SMEs Fueling the Shift
According to Mina Martin at Broker News, this trend is largely being driven by SMEs in a growth phase, which accounts for 40 per cent of the SME market.
The vast majority of these growing businesses — around 80 per cent — are moving away from banks and enlisting the services of non-bank lenders to fund their growth.
Flexible and Accessible Lending Solutions
ScotPac CEO Jon Sutton told Broker News that a significant transformation is underway in lending to SMEs.
“The days of cumbersome, one-size-fits-all SME financing are gone, replaced by a growing demand for more flexible options that are faster and more accessible,” he said.
The ScotPac Index report also revealed that over half of Australia’s SMEs plan to invest in their business within the next six months, with nearly all using their own funds as part of their expansion strategy.
The Future of Non-Bank Lending for SMEs
Mr. Sutton said the growing popularity of non-bank lenders among SMEs is set to continue due to rising demand for working capital, self-funded SMEs seeking alternative lending solutions, and greater awareness of the speed and benefits offered by non-bank lending products.
“SME owners and operators are increasingly becoming aware of the benefits of non-bank lending,” he told Broker News.
“That has motivated them to talk to their brokers and look beyond traditional funding arrangements.”
