Small businesses facing hurdles accessing funding

This ongoing challenge was highlighted in research from PayPal, which revealed that 67 per cent of SMEs across the country have missed out on potential revenue due to insufficient capital, while 59 per cent reported losing over $10,000 in revenue.

This has resulted in an average loss of $22,000 due to a lack of working capital.

Speaking to Broker Daily, PayPal Australia’s general manager, payments and product, Andrew Toon, said lenders are making issues more severe through strict eligibility criteria, extensive credit checks, and lengthy applications.

This is resulting in various issues for the country’s crucial SME sector. Toon has noticed a direct impact on businesses’ ability to maintain healthy cash flow, stock up on inventory, hire or retain staff, or invest in business improvements. He said this “hinders innovation and business growth.”

“Accessible financing allows entrepreneurs to focus on innovation and expansion rather than worrying about how to cover the next round of expenses. It is also vital in ensuring businesses can keep up with evolving consumer needs and stay relevant in a competitive market,” said Toon.

With an interest rate cut in February and more expected throughout 2025, Toon said he is expecting some easing in financial pressure.

Recent data from APRA highlighted a sharp rise in business lending figures. In fact, business lending growth outperformed residential lending over February.

Total business lending to non-financial businesses (e.g. retail, manufacturing, food services, etc) grew by 0.9 per cent over the month or $9.8 billion, reaching $1.1 trillion.

These figures surpassed both the dollar and percentage increases for residential lending, which grew a total of $7.5 billion (up 0.33 per cent) to $2.29 trillion.

Each of the big four banks reported outperforming increases in business lending when compared to their residential loan books.

For ANZ, business lending grew by 0.51 per cent over the month, up by $760 million, reaching a total of $147 billion.

CBA saw its business loan book increase by $3.36 billion or 1.6 per cent to $209 billion.

NAB’s business lending loan book grew by $2.15 billion (up by 0.92 per cent) to $233 billion.

And Westpac recorded 1.18 per cent in its business lending book, up by $2.03 billion, reaching $174 billion.

With strong numbers and added attention from the majors, could a turnaround for our struggling SMEs be in sight?

[Related: Business lending growth outperforms resi over February]

Jack Campbell is the editor of Broker Daily. After graduating from the University of Wollongong in 2022, Jack began his journalistic career working on Broker Daily’s sister brand, HR Leader. In August 2023 he was made the news editor and worked alongside some talented journalists writing articles and recording podcasts.

To reach Jack, email him at: jack.campbell@momentummedia.com.au