A new survey has highlighted important financing challenges facing Australia’s internationally active businesses.
The Australian International Business Survey 2015 found that a third of respondents sought additional funding from a financial institution in the last three years to expand their international operations, with 34 per cent failing in their attempt to secure additional funding.
For small international businesses (those with a turnover of below $1 million), the share of unsuccessful funding attempts rose to 46 per cent.
The most common reason for failed funding attempts was security issues (45 per cent), followed by the lender declining the application due to inadequate cash flow (21 per cent), and the respondent withdrawing their application due to the lender’s poor understanding of the transaction (15 per cent).
The survey also found that 45 per cent of respondents found it harder to source debt finance for international business opportunities than for domestic opportunities, while just six per cent found it easier.
The main reasons cited for this greater difficulty included a lack of business size (28 per cent), the unwillingness of a bank to lend for overseas business (27 per cent), and a lack of finances or security for loans (23 per cent).
Furthermore, 86 per cent of survey respondents said retained earnings are an important source of finance for domestic operations that service export sales. This is more than twice the amount of exporters who said domestic banks are important, while just 10 per cent of exporters considered overseas banks important.