What do SMEs want from lenders this year?

They have three main priorities, non-bank reveals

What do SMEs want from lenders this year?


By Jayden Fennell

A new survey by small business lender ScotPac has uncovered the top three things SMEs want from finance providers in 2023.

ScotPac interviewed 718 small-to-medium enterprises located across the nation with annual revenues of $1 million to $20 million. The results revealed that speed, ease and dependable customer service are SMEs top three priorities.

Sectors interviewed for the ScotPac bi-annual SME Growth Index included manufacturing (14.5%), business services (14.1%), retail (11.4%), wholesale (11.0%), personal/other services (10.6%), construction (9.6%) and 28.8% all other industries including transport, mining, agriculture, media, accommodation, finance (non-bank) and electricity.

“These are the common themes Australian SMEs are looking for when sourcing new business finance or refinancing existing loan facilities in 2023,” said ScotPac group executive, client acquisition and finance Craig Michie (pictured above).

“Topping the list for SMEs was the onboarding process, with an overwhelming 95% of businesses saying they want the least amount of paperwork and administrative hurdles – up from 90% at the outset of the pandemic in March 2020.”

What else do SMEs want to see from lenders?

Michie said the next most critical factor was rapid credit approval, with 72% of SMEs nominating it as key to their decision making, up from 67% in March 2020.

“Rounding out the top three was 36% of SMEs reporting consistently high levels of customer service were highly valued, up from 31% in March 2020,” he said.

Other top findings related to SMEs seeking a new loan or a refinance facility included word-of-mouth referrals as an important pathway to finding a new lender for 35% of SMEs.

Another 7.5% of SMEs were swayed by their existing transaction banking relationships and only 3% nominated reputation as a relevant factor

“SMEs are becoming more discerning when it comes to choosing a finance partner, with 85% now shopping around for the right features and benefits, up from 77% in March 2020,” Michie said.

He said the findings were a good reflection of the priorities for most Australian SMEs and the increasingly competitive nature of business finance.

“Most SME owners and operators want to focus their time and energy on running their business, not producing copious spreadsheets for prospective finance partners.

“ScotPac has built its business around providing SMEs with quick approvals and the certainty that fuss-free funding will be available when they need it, so they can act quickly and confidently as opportunities arise.”

Technology rising in popularity

Michie said ScotPac specialised in lending to businesses and had used that knowledge and leading-edge technology to make the process as quick and easy as possible. 

“When you add the ability for brokers and their clients to deal directly with the credit approver and have ongoing the support of a dedicated relationship manager, it’s a winning formula for business owners,” he said.

A December survey from the SME lender found ongoing supply chain problems were continuing to plague SMEs with 100% of Australian SMEs hit by supply chain disruptions. As a result, two in three are increasing their prices.

ScotPac CEO Jon Sutton said larger SMEs ($5 million to $20 million in revenue) told the lender they experienced average production and other input cost rises of 20%, compared to 12% for smaller SMEs ($1 million to under $5 million in revenue).

“Larger SMEs increased the price of their goods and services by an average of 18%, compared to an average increase of just 1.5% for smaller SMEs,” Sutton said.

“The key areas of advice SMEs felt they needed to better navigate supply chain disruptions included alternate business funding tools such as invoice finance (25%), general risk advice and guidance (20%) and new supplier network referrals (16%).”

ScotPac launched a new broker portal in November, with the intention of helping to deliver brokers digital tools to help them find the right solutions for their clients faster than ever.

“Broking has become more sophisticated, competitive and reliant on digital trends in recent years and the aim of the Partner Portal is to help brokers achieve more in less time,” Michie said.

“The portal allows brokers to quickly navigate loan products and secure fast finance for clients. This includes our easy new instant asset finance approvals, which have contributed to 300% growth in digital applications in the past six months.”

What do you think of these findings on SMEs? Let us know in the comment section below.

Related Stories

Keep up with the latest news and events

Join our mailing list, it’s free!