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Study finds seasonal online lending demand for SMEs


93% of SMEs also don't know credit score

There is clear evidence of seasonal rises and falls in online business lending, with demand peaking just before the festive season as well as in the lead-up to the end of financial year, according to a study by OnDeck Australia released this week.

Applications for lending were up 145% in November, compared to the average monthly demand in 2017. This was more pronounced in the service industry, with loan applications in November 190% higher than the monthly average. Despite the increase in consumer spending around festive periods, the study found lending patterns in the retail and wholesale trade industries remained relatively stable throughout the year, suggesting trade businesses were not necessarily borrowing more in anticipation of the Christmas period. The study also found small- and medium-enterprise (SMEs) owners were more likely to apply for a loan during business hours in the middle of the week.

Michael Burke, head of sales at OnDeck Australia believes the study shows the value for lenders of understanding the differences between business industries. "The patterns are entrenched across all small businesses but there are also marked differences between industry sectors. For brokers, this means looking at their clients' businesses and understanding the impact of seasonal lending patterns on each of those businesses," he said.

SME owners unsure of credit score

93% of small business owners don't know their credit score and only 42% know the actual purpose of a credit score, according to another recent survey by OnDeck Australia and MYOB. Of the 7% of businesses that know their credit score, only half had checked it within the last 12 months. With small businesses accounting for over 99% of all businesses in Australia, and 67% of total employment, the study shows a worrying lack of understanding on the part of business owners.

Cameron Poolman, CEO of OnDeck Australia, believes it's important to help inform SME owners of the role credit scores play in their business. "There is an important education opportunity here to help small business owners recognise how knowing their credit score can inform and empower them by potentially creating more opportunities for their business through improved access to funding and funding options. The prevailing lack of understanding around scoring is an issue for small business, especially given the size and importance of the sector to the Australian economy," he said.

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