How many SMEs find it difficult to repay business loans?

Blog 1100x733 fear debt

Ever thought about taking out a loan for your business but hesitated because you were worried about meeting your repayments? Don’t worry, it’s a common concern. But some promising data has just come out that might help you put those fears aside.

You gotta spend money to make money, so the saying goes.

But what if your business’s cash flow has been heavily impacted this year due to COVID-19? What options do you have at your disposal?

Well, according to the Australian Banking Association’s latest report, $10 billion in new lending was made to small businesses in the three months to August 2021 – a 26% jump ($7.9 billion) on last year.

Which means as many as 50% of SMEs now hold a borrowing product of some sort.

So while taking out finance for your business might feel daunting, rest assured it’s something most businesses do, and there are a range of different finance products and options available to suit businesses of all shapes and sizes.

How difficult do most businesses find it to pay back loans?

So, here’s the good news.

Despite the difficult business conditions during 2021, just 1-in-6 small businesses (16%) found it difficult to meet their financial commitments.

That’s opposed to 41% of SMEs that found it “easy” or “very easy”, while 36% were indifferent.

And many of these businesses are taking out finance to help keep their doors open and operations running smoothly.

The top reason small and micro businesses gave for recently seeking finance was to ‘maintain short-term cash flow or liquidity’ (about 50%), while the second most common reason was to ‘ensure survival of the business’ (about 40%).

Replacing, upgrading or purchasing equipment or machinery came in third (20-30%).

Want to explore your finance options?

The SME lending space is an evolving one, with a surge of new lenders and products recently hitting the market.

And as brokers, we’re constantly upskilling and learning to make sure we stay abreast of the expanding options available to small business owners.

So if you’re an SME owner who might be in need of funding, get in touch today.

The sooner we can discuss your options with you, the better placed your business can be to hit the ground running in 2022 and thrive beyond.

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.

We thought you might also like...

0047 BLOG 15 Four must haves for your next property inspection

Four must-haves for your next property inspection

You’re walking down the street when you see it – the perfect house. It’s charming, quaint and, okay, maybe a bit small, but....
Read More >
0054 BLOG 7 Dealing with troublesome tenants

Dealing with troublesome tenants

Most tenants are reliable, but if you’re a property investor, chances are you’ll encounter at least one bad renter. From....
Read More >
Blog 1100x733 scheme caps

Property price caps increased for first home loan deposit scheme

First home buyers can now purchase more expensive properties under the federal government’s hugely popular 5% deposit, no LMI....
Read More >

Why good tenants are more important than you think

Given you don’t have to spend much time with your tenants, you may think it’s not important who they are.
Read More >