While many SME owners worry about their access to finance, a surge of new lenders and products is rapidly expanding the options available. And brokers have an important role to play for businesses, says the Productivity Commission.
Changes to lending markets over the past decade mean there’s now a wide range of business finance options that don’t require property as security, according to a new report by the Productivity Commission.
However, a lack of awareness of these new finance options is one of the biggest hurdles preventing SME owners from accessing them.
This is where a broker with up-to-date market knowledge can play an important role for your business, explains the Productivity Commission.
“SMEs may not be aware of all their lending options and may not feel confident about new options. Brokers can help match them with appropriate lending options,” the Productivity Commission says.
“These options include borrowing against alternative collateral – such as vehicles, machinery and intangible assets (for example, invoices and other expected receipts) – and unsecured lending.”
Changes to prudential rules have made lending to SMEs less attractive for the major banks, but at the same time, created opportunities for new and established non-bank lenders, says the Productivity Commission.
This has resulted in a broader range of lending options beyond traditional property-secured loans for SMEs, especially with the emergence of fintechs and more accessible borrower data.
“Combining new data sources with innovative analytical tools (such as artificial intelligence and machine learning) has given many lenders the information and confidence to lend to SMEs without the security of property,” adds the report.
However, while most SMEs are aware of banks as a source of finance, awareness of the newer options is more limited.
As brokers, we’re constantly upskilling and learning to make sure we stay abreast of the latest finance options and players in the SME finance space.
“Brokers are expected to have current market knowledge and participate in ongoing training to stay informed about new lenders and products,” explains the report.
“For example, aggregators and industry associations hold various educational events – including conferences, workshops and webinars – to improve brokers’ understanding of SME lending options.”
And it’s for this reason that the Productivity Commission highlights the key role brokers can play for busy SME owners.
“By connecting borrowers to lenders, brokers can play an important education role, particularly for those SME customers that do not have the time or inclination to undertake detailed market research,” says the report.
So if you’re in need of finance for your SME business, but don’t know where to start, get in touch today.
We’d love to run you through the growing number of finance options available for SMEs like yours.
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