Aussie SMEs embrace non-bank lenders for investment

A shift in Australian small and medium-sized enterprises’ (SMEs) approach to funding was revealed in the 10th anniversary edition of ScotPac’s SME Growth Index Report.

According to the report, 90 per cent of Australian SMEs are now open to partnering with non-bank lenders, a dramatic increase from 2018 when only 44 per cent were willing to consider such options.

The report highlighted a notable change in investment behaviour, with more than half of SMEs planning to invest in their business in 2024, intending to work with non-bank lenders.

This marks a sharp contrast to 2014, when only 7 per cent of SMEs sought lending solutions outside traditional banks.

The report found a record 52 per cent of SMEs plan to use non-bank lending for new business investments, surpassing the 42 per cent that intend to rely on bank loans.

Additionally, 59 per cent of SMEs are set to invest in their businesses over the next six months, maintaining the levels seen in 2023, but down from the peak of 65 per cent recorded in September 2019.

Just 15 per cent of SMEs experiencing declining growth are planning new investments in the coming six months, according to the report.

The SME Growth Index Report also identifies the top three reasons SMEs are turning to non-bank lenders: easier onboarding processes, faster availability of funds, and the benefit of not having to borrow against their homes.

These findings align with recent capital expenditure (capex) data from the Australian Bureau of Statistics (ABS), which reported a 10.2 per cent increase in the final capex estimate for 2023–24 compared to the previous year. Planned capex for 2024–25 is expected to rise by an additional 10.3 per cent.

Jon Sutton, CEO of ScotPac, attributed the growing preference for non-bank business lending to increased awareness of specialised lending products and the advantages of speed and flexibility they offer.

“Most owners who are planning to invest in their business want quick and easy access to working capital, preferably without having to put up their home as collateral,” Sutton said.

“At ScotPac, we understand that time is a business owner’s greatest asset, and sometimes 24 hours can be the difference between seizing or losing a new opportunity.

“That is why, over 35 years in business, ScotPac has developed a comprehensive suite of fast and flexible lending products to support SMEs in just about every investment scenario.

“Whether it is buying new assets, hiring more staff, or helping to pay down a tax bill, ScotPac has the right product to help.”

[RELATED: SMEs unwavering in investment opportunities amid economic headwinds]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.