Small business owners and their accountants and advisors will have a much better idea of the finance options available to them, thanks to a new resource developed by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) and Scottish Pacific.
Launched today, the Business Funding Guide is an industry first. The guide delivers a five-step process to financial fitness and outlines various funding options available to small business owners. Ombudsman Kate Carnell hopes the information in the guide will assist small business owners and their advisors to find the right funding to suit their needs.
Carnell told Kochie’s Business Builders that in a post-Royal Commission world, many young small business owners were feeling the pinch of the credit crunch, unable to secure access to finance.
“One of the things we know, particularly for young business owners – and we’re talking people up to the age of 45 – many of them don’t have much equity,” says Carnell.
“They don’t have a lot of equity in bricks and mortar, and banks have only traditionally lent based on the equity in bricks and mortar.
“So, what this document does, is explain the other sources of finance that exist. Everything from fintechs to invoice financing to trade financing. There are a lot of different products in the marketplace and it talks about the different pros and cons and scenarios that each type of funding is most appropriate for.”
Scottish Pacific’s SME Growth Index recently reported 56 per cent of SME’s as saying the Royal Commission has made it more difficult to access business funding.
Carnell agrees: “We know a third of small business owners have had their applications for bank loans rejected. Many more have not bothered to even apply as they’ve been told that unless they have significant equity in real estate, their application will fail.”
That’s why Carnell believes it is essential that small businesses understand the range of financial providers and products on the market.
“it’s really interesting as the big four banks have provided 84 percent of the lending for such a long time that many businesses and advisors have not looked beyond the big four as sources of finance.
“This independent guide provides comprehensive up-to-date information about a range of funding options available to them, along with a step-by-step pathway to becoming ‘finance fit’ to give small business operators their best chance at securing funding,” she said.
Scottish Pacific CEO Peter Langham said being a business owner could be lonely.
“Business owners work long hours and carry a lot of responsibility, working so hard to grow their businesses,” Scottish Pacific CEO Peter Langham says.
“We feel very strongly that their key to success is understanding where to get assistance, including ways they can finance their enterprises, so they can find funding that fits their needs.
“Business operators looking to grow, employ and stimulate the economy, need to consider all of the funding options, including options that are not linked to their personal property, to make the best choice for their business,” Langham said.
Chartered Accountants Australia and New Zealand Senior Tax Advocate, Susan Franks welcomed the introduction of the Business Funding Guide, saying business owners are often time and cash poor.
“This is a handy checklist that accountants can use to step their clients through important funding choices beyond relying on loans secured by the family home.
“It focuses on understanding the existing cash flow, ensuring the separation of personal and business finances and developing realistic business plans which are essential foundations for any successful business in the start-up and growth phase,” Frank said.
The Business Funding Guide targets SMEs’ trusted advisers because of the key role they play in helping business owners with financial decisions. Download a copy.
There is also a companion guide – FitSME- Essential Guide to Business Funding that gives small business operators the most important information they need to know about becoming ‘finance fit’.