Today marks the third annual World MSME Day, a UN initiative intended to draw attention to the contribution that micro, small and medium-sized enterprises make to both local and global economies – as well as the need to improve their access to finance.
“World MSME Day is a great opportunity to raise awareness of the positive impact the small business sector has, and the importance of improving their access to finance. Finance keeps small business moving, and when they succeed, local and global economies prosper,” said Prospa GM of sales and business development, Matt Bauld.
Prospa research has highlighted how lending to small business positively affects the economy through contributing to GDP and creating and supporting jobs.
In Australia, there are more than 2.3m small businesses that account for 35% of Australia’s GDP and 44% of private sector employment. However, they face significant financial pressures.
Data released this week by accounting software firm Xero, analysed invoices from 150,000 Australian SMEs and concluded that 53% of trade credit invoices are paid late by big business suppliers and customers - on average 23 days after their due date. Squeezing SMEs, Xero calculates these late payments are worth $115bn.
Their findings confirm similar trends identified by OnDeck Australia.
CEO Cameron Poolman said, “Our own analysis found that Australian small business needed better financing options, but that conditions attached to bank credit put it out of reach for many small businesses.
“As a result, many small businesses were turning to other sources to meet unmet finance demands, with 66% reporting they would resort to unsuitable products like personal credit cards to ease cash ﬂow problems.”
The combination of these issues has helped position SME lenders like Prospa and OnDeck to grow rapidly through better meeting the needs of the crucial small business sector.