Traditional lending proving a problem for small business owners

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Traditional lending proving a problem for small business owners
  • One in five (20 per cent) small businesses have even been refused a bank loan in the past.
  • 67 per cent believe barriers to finance are inhibiting business growth.

Research by PayPal Australia has uncovered the nation’s small business owners are moving away from traditional lenders to embrace fintech solutions for their finance.

The study found three in four business owners think the process of securing a traditional business loan is more difficult than it used to be. While more than two thirds (67 per cent) believe this is causing barriers to business growth.

PayPal’s research found that two in five small businesses (42%) have used a non-bank, alternative lender in the past year, with the same number saying they would consider a non-traditional lender in the future.

PayPal has itself provided a source of alternative finance to over 7000 Australian small businesses since the launch of its PayPal Working Capital facility in 2014, providing over $500 million to small business owners. PayPal Working Capital allows small businesses to apply for, and receive, a business loan against their PayPal sales online in minutes.

Andrew Baines, General Manager, PayPal Credit, Australia, said PayPal’s support to small businesses goes beyond being a button on a website.

“PayPal Working Capital only launched in Australia less than five years ago, and with over $500 million now issued to more than 7,000 businesses, we can see that there is an ongoing demand for alternative finance solutions to support small businesses and to help them thrive.

“The PayPal Working Capital product allows our customers to access the finance they need, typically within minutes. The fast and easy application process removes the barriers to what business owners need to focus on most – the successful running and operation of their business.”

Baines said obtaining finance can be a drawn-out process for small businesses owners

“…Time which many small businesses just don’t have. Increasingly, we are seeing businesses seek tailored solutions which meet their business needs, and bridge the gap left by traditional funding providers. In order to remain successful, it is important that Australian SMBs are weighing up their options and sourcing the best lending solution for their business,” Baines said.

Melbourne based Phoebe Yu is one of the small business owners to have benefited from this alternative funding, after setting up Ettitudea high-quality, innovative bed linen company, in 2014.

Yu said, “It was extremely difficult to get a traditional bank loan without having collateral assets and whilst trying to reinvest to help grow the business. PayPal Working Capital offered us the perfect solution, alleviating cash flow and inventory stresses, particularly around holiday seasons. We are currently paying off our 10th Working Capital loan and will most definitely be drawing from it again in the future. The flexible funding has helped us expand our business across Australia and into the US.”

 

 

 

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