A non-bank lender has urged brokers to prepare for the influx in demand for SME funding likely to come over the next four to eight weeks due to seasonal drivers.
Because small businesses face cash flow peaks and troughs at the end of year period, online lender Prospa is encouraging brokers to anticipate and provide solutions to their funding needs.
Prospa conducted a broker poll that revealed managing cash flow is the driving reason small business clients seek funding (53%), followed by buying or upgrading equipment (20%), business expansion (12%) and meeting BAS or ATO debt (10%).
“Staying on top of cash flow is a tough but essential part of running a small business, especially in the lead up to the holiday season,” said Prospa head of partnerships, Alex Brgudac.
"Depending on factors like industry, location and customer habits, this time of year can be a business boom or tumbleweeds for SME clients – but both scenarios come with cash flow pressures. Prospa research has shown that two-thirds of small business owners feel stressed during the holiday period because of cash flow problems.”
The summer holiday season and New Year festivities have many businesses looking to fund extra staff and supplies. Further, retailers need extra stock to capitalise on big sales events, such as Black Friday, Click Frenzy and Cyber Monday. Construction is also in full force to complete the pre-Christmas builds and renovations, as well as lock in new year contracts prior to the trade hiatus in January.
Conversely, small businesses will be preparing for cash flow squeezes that accompany office closures in late December and may need funding to cover bills and wages as new work slows down.
“Brokers need to be aware that small businesses face different cash flow pressures during this time. Now is the time to be talking to your small business clients about their specific funding needs and the solutions available to them," said Brgudac.
"We’ve taken on feedback from small business customers and to help them manage cash flow, we’re offering a six-week period of no repayments that they can take when it suits their business. We’ve also increased our line of credit facility to a maximum of $100,000 to really address those seasonal cash flow needs and give businesses some peace of mind.”