Research finds business finance hasn’t been this hard since 2014

Posted: 14 August 2018 2:13 pm
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small business owner

Smaller businesses in particular are finding it hard to access finance.

The quarterly Sensis Small Business Index has been released for June 2018 and small- to medium-sized businesses (SMBs) are finding it more difficult to access finance than they have for a number of years. In fact, things haven't been this difficult since September 2014, according to the Sensis.

The Sensis is comprised of a survey of SMBs across Australia, with results providing a snapshot of business confidence for that quarter. The survey tracks business activity, expectations and overall confidence for the past three months. According to the results, the number of businesses that recorded a positive outlook on obtaining finance was outweighed by the number of businesses with a negative outlook. This "net balance" of -3 was the first negative score recorded in almost 4 years when it was -9.

Source: Sensis Business Index

SMBs in Western Australia found it the hardest to access finance, recording a net balance score of -20. This was followed by New South Wales (-6), the Northern Territory (-6) and Victoria (-5). Only two states recorded positive balances, Queensland (+7) and Tasmania (+23), while South Australia and the Australian Capital Territory recorded neutral balances.

Continuing a trend from previous Indexes, medium-sized businesses found it easier to access finance than smaller-sized businesses. Medium-sized businesses recorded a positive net balance score (+13) while smaller businesses recorded a negative net balance score (-4).

Source: Sensis Business Index

Interestingly, when comparing statistics with the previous Sensis Index, fewer businesses were applying for finance but a higher percentage of them were successful. According to the June 2018 Index, 13% of SMBs sought finance compared to 17% from the previous quarter. Of those that applied, 69% were successful, which is an increase of 4% from the previous quarter.

Breaking the results down by industry, there are stark differences as well. Businesses in transport and storage found it the easiest to access finance with a very positive net balance score of +30 while businesses in the restaurant, accommodation and cafe space struggled according to their net balance score of -32. The building and construction (+6) as well as the manufacturing sectors had a positive net balance score while the finance and insurance sector (-32) and retail trade (-12) had negative net balance scores.

However, the general trend of finding it difficult to access finance has not had an effect on business confidence overall.

"Australia’s small and medium businesses continue to step confidently into 2018, with the June quarter Sensis Business Index showing confidence reached its highest level since December 2009," John Allan, Sensis's chief executive officer, stated in the report's forward.

The net balance score showing the overall confidence of Australia's SMBs has increased seven points this quarter to +49. The survey found 62% of SMBs were feeling confident about the year ahead, while only 13% were feeling worried.

"The June quarter results are good news for Australia’s SMBs and it’s great to see record levels of optimism shared right across our country," said Allan. See the full Index here.

If you're not sure where to start with small business financing, check out our guide to finding financing for every business stage.

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