What’s most important to you when selecting a lender to provide finance for your small business right now? Well, Australian small business owners have put ‘flexibility’ when it comes to loan repayments right up there on their priority list.
And that should come as no surprise given the disruptive nature of the economy that most businesses have had to endure over the past two years.
In fact, research conducted by RFi Group, commissioned by small business lender Prospa, found one-third of SMEs (33%) would more likely choose a lender with more flexible repayment options when applying for funds over the next 12 months.
Well, when respondents were given the opportunity to define flexible repayments, one key theme was prevalent: flexible timeframes.
Many SMEs associated flexible loan repayments with the ability to repay loans earlier, extend repayment periods, or make no repayments for a given time (ie. up to 8 weeks).
“Small businesses were required to adapt, shift, or pivot over the past two years,” explains Prospa national sales manager Roberto Sanz.
“Therefore, it is understandable that business owners are looking for flexibility to work through changing market conditions and make necessary adjustments to keep their business moving.”
Prospa’s research is in line with that of SME non-bank lender ScotPac, which found that cash flow was a top-three concern for business owners right now, with 81.5% of SMEs admitting it had them worried.
The SME lending space is an evolving one, with a surge of new lenders and products recently hitting the market.
And one key emerging trend is, yep, you guessed it: flexibility.
So if you’re an SME owner who might be in need of flexible funding, get in touch today. We’d love to help your business explore its options.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
[et_pb_section admin_label=”section”]
[et_pb_row admin_label=”row”]
[et_pb_column type=”4_4″][et_pb_text admin_label=”Text”]Floods, fire and pandemic – it’s been an incredibly tough 15 months for many Australian businesses. And with government support about to end, looking after your mental health will be just as important as taking care of your business’s financial health.
With the federal government’s COVID-19 JobKeeper wage subsidy scheme expiring on 28 March, experts are tipping as many as a quarter of a million jobs could be lost.
When you also consider that rental eviction moratoriums are coming to an end in several states, and flooding is taking place across large parts of Australia’s east, then there is a lot of pressure on small businesses owners across the country right now.
Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Bruce Billson says it’s important for small business owners to consider their mental health and reach out if they’re not coping.
“Help is available to small business owners who need it. NewAccess for Small Business Owners offers free one-on-one telehealth sessions with specially trained mental health coaches providing evidence-based advice on strategies for managing stress,” he says.
Developed by BeyondBlue, NewAccess is a confidential mental health program where coaches with a small business background work with business owners to tackle challenges.
Businesses can access up to six sessions, with the initial 60-minute assessment designed to talk through your challenges, develop a problem statement and create a personalised needs-based plan.
Subsequent half-hour sessions involve the business coach stepping you through your plan, providing practical tools for managing stress, and reviewing progress.
“Being able to talk to someone who understands the mental load of running a small business will make a real difference,” Mr Billson says.
“Small business owners who look after their mental health, can also help their business.”
No doctor’s referral or mental health treatment plan is required and the free service is available via phone or video call from 8am to 8pm.
NewAccess has been incorporated into the ASBFEO’s My Business Health tool, which provides assistance in three key areas.
The section on how to keep your business afloat looks at government support, managing outgoings and cashflow.
How to manage your business explores COVID-19, staffing, workplace health and safety, resolving disputes and insolvency challenges. Where to access support includes a 5-minute wellbeing checkup, links to support services and natural disaster recovery.
If it’s your business’s finances that are causing you stress, please know that there are lender support services to help you navigate financial challenges.
For example, Australian banks offer a range of financial support options to help farmers and small businesses affected by natural disasters, such as the NSW floods, which can include:
– a deferral of scheduled loan repayments
– waiving fees and charges, including break costs on early access to term deposits
– debt consolidation to help make repayments more manageable
– restructuring existing loans, without the usual establishment fees
– deferring interest payments on a case-by-case basis
– offering additional finance to help cover cash flow shortages.
If you’d like to talk through how some of these options may help your business, please don’t hesitate to get in touch with us or your lender today.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.[/et_pb_text][/et_pb_column]
[/et_pb_row]
[/et_pb_section]
Small business owners in need of credit will be buoyed by new data that shows the approval rate for loans has remained strong throughout the coronavirus crisis.
In fact, about 70% of SME business loan applications received by lenders have been approved since early February, according to Australian Banking Association (ABA) statistics.
That’s resulted in more than 128,000 Australian sole traders, small businesses and medium-sized businesses receiving loans, with an average loan size of $320,000.
Breaking it down further, that’s 500 new SME loans a day for more than 250 days.
The ABA data is in line with the latest Sensis Business Index, which shows 26% of businesses that applied for finance over the past three months were knocked back.
The figures have no doubt been assisted by the relaxation of business lending rules, the federal government’s Instant Asset Write-off Scheme (now expanded to “temporary full expensing”), and the Coronavirus SME Loan Guarantee Scheme.
Temporary full expensing allows businesses, both big and small, to immediately write off any eligible depreciable asset, at any cost, up until 30 June 2022.
This can help improve your business’s cash flow by allowing you to reinvest the funds back into your business sooner.
The Coronavirus SME Loan Guarantee Scheme, meanwhile, allows businesses with a turnover of up to $50 million to apply for loans of up to $1 million with participating lenders.
The loans can generally be offered by lenders “more cheaply and more freely” compared to ordinary business loans, as the government will guarantee 50% of the new loans.
While 70% of loans being approved is great news, it’s obviously not quite a done deal when you apply for finance in the current financial landscape.
So, to help avoid being among the unfortunate remaining 30% of businesses, get in touch with us today.
Our job is to act as a conduit between you and the lender, which allows you to focus on your business while we focus on getting you the finance that your business needs.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
[et_pb_section fb_built=”1″ _builder_version=”3.22.3″][et_pb_row _builder_version=”3.22.3″ background_size=”initial” background_position=”top_left” background_repeat=”repeat”][et_pb_column type=”4_4″ _builder_version=”3.0.47″][et_pb_text _builder_version=”3.23.3″]
Promising news for SMEs this week: supply chain financing provider Greensill has given late-paying companies formal notice that it will ditch them if they continue to extend their payment terms beyond 30 days.
This is good news for SMEs because cash flow problems – which are often caused by, or exacerbated by, late payments – are one of the biggest reasons for small businesses failing.
Well, back in February, supply chain financing (SCF) provider Greensill informed all Australian clients that they must not push out payment terms to SME suppliers beyond 30 days.
The multi-billion-dollar company, founded by Bundaberg-born, London-based financier Lex Greensill, says virtually all of its clients in Australia have complied (keyword: “virtually”, but more on that soon).
“Greensill has allowed a period for the remaining clients to complete their internal reviews stemming from our request,” a Greensill statement says.
“We have given formal notice to those clients that their SCF facilities will be discontinued unless they ensure that they do not use our SCF facilities to push out payment terms to SME suppliers beyond 30 days.”
Australian Small Business and Family Enterprise Ombudsman Kate Carnell has the answer on that one.
She says it’s clear Greensill’s statement is in relation to its dealings with contractor UGL, owned by construction firm CIMIC – Australia’s biggest construction company.
“UGL has reportedly extended its payment terms to its small business suppliers to 65 days from the end of [the] month the invoice is lodged, offering supply chain finance to those that want to be paid earlier and are willing to take a discount on the invoiced amount,” Ms Carnell explains.
“This is an example of clear misuse of supply chain finance as outlined in our recently released Supply Chain Financing Review. Practices such as this are harmful to small businesses, especially in the current challenging environment.”
The promising news is that according to the AFR, CIMIC has now put its controversial SCF scheme “under review”.
SCF, also known as supplier finance or reverse factoring, can free up cash flow for both the SME business that sends the invoice to be paid, and the company that owes the money.
It does this by the SCF provider acting as a facilitator between the two.
Here’s a quick example: let’s say Big Business Inc (buyer) orders some machine parts from Little Joe Traders (supplier).
Little Joe then sends the invoice to Big Business Inc, which approves the invoice and confirms that it will pay the SCF provider for the invoice at the invoice’s maturity.
Little Joe then has two options: 1) Patiently wait for the invoice’s payment terms to be met and paid in full; or 2) Get paid earlier by the SCF provider, but at a discounted rate.
Often Little Joe’s decision will depend on his cash flow requirements at the time.
Normally nothing. When done right “it’s an excellent concept for both buyer and seller”, says Clive Isenberg, chief executive of Octet, which specialises in supply chain financing for smaller companies.
But the risk, as Mr Isenberg points out, is that if your business is supplying the big end of town, you can become overly reliant on them and have to play by their rules.
“You are being constantly pressurised to follow the way they’re going. You’ve got to agree to their payment terms,” he told the AFR.
As you’re well aware, business cash flow solutions aren’t exclusively for the big end of town.
There are plenty of products that cater to SMEs’ many different needs.
So if you’d like to explore some of the options available to your business, then please get in touch – we’re happy to run you through them.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
[/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]
SME businesses in need of working capital due to the coronavirus outbreak can now access unsecured loans “more cheaply and more freely” than ordinary business loans.
The initiative is part of the government’s $40 billion Coronavirus SME Loan Guarantee Scheme, which kicked off just before the Easter weekend.
Because the government will guarantee 50% of the new loans, lenders can offer the loans “more cheaply and more freely” compared to ordinary business loans, says the Australian Banking Association.
The loans will be in the form of unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
Furthermore, no payments are required from the business on these loans for the first six months (however interest will capitalise during the repayment holiday).
The government will provide eligible lenders with a guarantee for loans with the following terms:
– eligible SMEs, including sole traders, must have a turnover of less than $50 million
– maximum loans of $250,000 per borrower
– loans will be up to three years, with an initial six month repayment holiday
– unsecured finance, meaning that borrowers will not have to provide an asset as security for the loan.
The decision on whether to extend credit, and management of the loan, will remain with the lender.
Participating lenders are already accepting applications from SMEs. So if you’re looking to bridge a gap in your business’s cash flow, please give us a call.
We’re more than happy to discuss your eligibility and more features of the scheme.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.
