Brokers may now find it easier to present a comprehensive view of the solutions available to SME clients and, in turn, increase the likelihood of SME funding applications being approved, following the launch of a new resource.
The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) partnered with Scottish Pacific Business Finance to create a guide for brokers and other financial advisers.
The resource provides “comprehensive, up-to-date information” about the main funding options on the market, along with supporting tools such as a funding decision flowchart and scenarios illustrating which type of funding best suits a variety of business needs.
The ASBFEO also released a supporting document for brokers to pass on to their small business customers that includes a step-by-step pathway to becoming ‘finance fit’ to help ensure SMEs have the best chance to secure funding.
ASBFEO ombudsman Kate Carnell, explained the origin of the guide.
“Already, small businesses were struggling to get the finance that they needed to grow, but with the advent of the royal commission, things have tightened up even further,” she said.
“Small businesses are also being hit by mounting serviceability requirements often aligned to the requirements of consumers. As many have ‘lumpy’ revenue and expenditure, these changes to serviceability are leading to loan refusals,” she added.
Around one third of small business owners have had their applications for bank loans rejected, likely dissuading many others from even applying.
Further, Carnell believes the young Australians who have been kept out of the property market shouldn’t have a harder time accessing finance just because they lack bricks and mortar security.
“They’re the people that we desperately want to be entrepreneurs, to grow businesses and to contribute to a growing economy,” she said.
“There are lots of other funding options, lots of other products that are in the market at the moment that small businesses don’t know about. We thought it was very important for small businesses and their advisers, accountants, and others to have a simple guide to see what’s available right now.”
Scottish Pacific CEO Peter Langham echoed Carnell’s sentiments, saying that the underlying message of the guide is, “Don’t give up.”
“There are people out there willing to lend. There are different options out there for you. You just need to keep looking,” he said.
Brokers play a key role in helping time-poor business owners find the finance product that best fits their needs.
“Brokers need to be aware of what the solutions are, because the business owner is certainly not going to be aware. They spend their time thinking about their business, so brokers are the ones who need to know, and need to research.”
The final version of the Business Funding Guide will be made available later this year. Feedback on the first edition can be submitted via: Advocacy@asbfeo.gov.au