Recent figures cite more than 2 million SMEs exist in Australia. By itself, this is nothing more than a number – a large number. Though in context, it’s a significant number by virtue of size, influence and product requirements. Conversely, SME funding receives a fraction of the attention and focus of the big banks.
Over the last quarter, over 85 per cent of our settled transactions came from and went to SMEs. This has risen 17 per cent over the last 12 months, and reflects the general shift in the sector with small-business confidence improving now that the GFC is firmly in the rear-view mirror. Few things make people feel better than the value of their property (and thereby their equity) increasing. Nothing quite like a $100,000 plus boost to your net assets that required nil effort!
This buoyant property market and cheap home loan credit places our SMEs in a favourable position to retain their first mortgages and seek additional business funding. Despite the growth and success of the sector, entrepreneurs typically aren’t as diligent as they should be with their accounting affairs. This, combined with often requiring business-related cash injections quickly, often precludes financing from conventional lenders.
Short-term funding requirements for SMEs can be loosely lobbed into two categories:
1. exploiting business opportunities
2. working capital requirements
Opportunities expose themselves in many ways, like:
• the purchase of an established business
• creation of new business
• well-timed purchases of inventory and stock
• purchase of and funding for commercial property and their fit-outs
• working capital in general
Equally as important as capitalising on business opportunities as they arise, is the ability to quickly access working capital. This may be in the form of:
• refinancing of ill-fitted or term-expired commercial facilities
• payments to business creditors (including suppliers) and ATO liabilities
• discharge of insolvency petitions
There’s a direct and immediate opportunity for brokers to diversify into this lucrative sector. Whether it be capitalising on an opportunity or sidestepping a potential problem, Interim Finance can provide financing that meets the specific requirements for this growing market.