SME loans grow 145% in November

by Rebecca Pike26 Nov 2018

New analysis has shown applications for online SME loans grew by 145% above the monthly average in November, demonstrating strong cyclical funding patterns.

OnDeck looked at monthly data to understand how funding requests change throughout the year.

The trend was particularly noticeable for service industries such as accommodation and food services, which showed an increase in applications of 190% in November when compared to average monthly demand in 2017.

The data showed the sectors that needed additional funding support at this time of year were retail spaces, cafes and restaurants, and tradespeople.

The data also found some lending patterns in other small business sectors were more evenly distributed around the year.

Challenging the festive season and EOFY trend, retail trade and wholesale trade lending remained more constant throughout the year, despite the obvious spike in consumer demand for retail products around festive periods.

Michael Burke, head of sales at OnDeck Australia, said that brokers could draw two key takeouts from the data.

Speaking to Australian Broker, he said, “First, our data confirms that many small businesses have increased demand during November/December. This means they need to be able to access capital to purchase stock, hire staff, promote the business, expand premises and other seasonally-driven funding needs.”

“Second, the flip side of the coin is that they know their customers will have a slower period around the corner in January, so they need to ensure their cash flow is stable to support the business through that down period.”

“Brokers have a role to play in this scenario as a trusted adviser to small business owners, helping them to take advantage of the growth opportunities during the high demand periods, and ensuring they are well prepared for the quieter periods

“From OnDeck’s perspective, our aim is build an awareness of these issues with brokers.”

“We’d like to see them proactively reaching out to customers and communicating with them on this topic and helping them recognise and understand the implications the peak period has for their business.”