Credit challenged SMEs create opportunities for brokers

by Julia Corderoy19 Mar 2015
More than six in 10 Australian SMEs identified challenging credit conditions as a key barrier to growth, which could create big opportunities for brokers.

Findings from the latest Scottish Pacific SME Growth Index revealed that 63.8% of Australian SMEs saw challenging credit conditions as a major barrier to business growth. Over half (54.7%) even admitted that the outright availability of credit is impeding growth prospects. 

Scottish Pacific CEO Peter Langham said the Index reflected the tough landscape facing many SMEs, who were so focused on daily issues around cash flow and funding, that they may not make time to look at the big picture.

“…an alarming 34.9% of small business owners do not have any concrete long term plans, which suggests a short term focus amongst small business owners and decision makers,” he said.

SMEs also indicated that they are broadly untrusting of outside advice, with 38.6% admitting they had no trusted business adviser. While this is unnerving, Langham says it also creates an opportunity for brokers. 

“The fact they were more likely to trust a friend to provide advice about their business than their well-qualified banker or accountant shows there is a real opportunity for finance brokers, accountants and lawyers to step up and fill this gap for SMEs, to make the process easier for them,” he said.

The value proposition of brokers for SMEs is further highlighted by the significant growth in the use of specialist non-bank lenders. While there is still a long way to go, the Index revealed that SME use of alternative funding as a preferred method of financing growth grew to 13.6%, compared to 10.8% in the September 2014 Index.