90% of Australian SMEs have declared they are open to partnering with a non-bank lender, a remarkable turnaround from 2018 when 44% of SMEs said they would not consider non-bank lending.
In the near-term, more than half of those SMEs planning to invest in their business in 2024 will partner with a non-bank lender. This is a dramatic shift from 2014 when just 7% of SMEs said they would find a lending solution from outside the banks.
The headline findings are contained in the 10th anniversary edition of ScotPac’s SME Growth Index Report, Australia’s longest-running SME sentiment check.
Key related findings include:
- A record 52% of SMEs planned to use non-bank lending to fund new business investment, exceeding the total planned bank lending figure of 42%.
- 59% of SMEs plan to invest in their business in the next six months, mirroring 2023 levels, but down from the high of 65% in September 2019.
- Just 15% of SMEs in a declining growth phase planned new investment in the next six months.
The high level of investment intention across the SME spectrum is consistent with capital expenditure (capex) data released last week from the Australian Bureau of Statistics. It reported the final estimate of capex for 2023-24 saw an increase of 10.2% compared to last year, with planned capex for 2024-25 to rise by a further 10.3%.
ScotPac CEO, Jon Sutton said the strong trend towards non-bank business lending for new investment could be traced to a greater awareness of the range of specialist business lending products available in the market, and the speed and flexibility on 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,” Mr 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.”
According to the SME Growth Index Report, the top three reasons SMEs sought to partner with a non-bank lender were easier onboarding processes, faster availability of funds, and the peace of mind of not having to borrow against the family home.
Across the Years – SME Business Investment Plans 2014-2024
- The share of SMEs planning to invest in their business in the next six months reached a decade-high of 65% in September 2019 (pre-COVID), followed by a 10-year low of 52% a year later in September 2020 (mid-COVID).
- The current level of 59% of SMEs planning to invest in the next six months matches that recorded in the very first SME Growth Index Report in 2014.
- The proportion of SMEs planning to use non-bank lending for new business investment has grown remarkably from 15% in September 2018 to 52% today.
