Small business loans amid restrictions in Australia

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Australian Small Business Loan Condition Amid New Restrictions
Pattyjansen / Pixabay

The world keeps on fighting COVID-19 a pandemic in which some countries are experiencing more difficulties than others. Australia, in particular, is among the countries with the most restrictions on freedom, and entrepreneurs around the world are paying particular attention to the latest developments.

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Will Australian companies be able to go through a new round of stringent restrictions with no immediate end in sight? Will banks and financial institutions continue to expand Australian small business loans among economic uncertainty?

Just weeks after the start of the new quarantine, we have some ideas that should give hope to interested entrepreneurs.

Australia’s isolation poses problems for small businesses

Canberra in Australia was the last to enter the strict quarantine… The lockdown on the capital means 400,000 people are denied access to their homes, except for important reasons. Canberra joins other major economic centers such as Sydney and Melbourne, which recently announced their own lockdowns.

In fact, Melbourne is Australia’s second largest city and announced its sixth lockdown in early August. Many small businesses in Melbourne and the affected regions may choose to close their doors for good.

Unfortunately, existing government support programs require small businesses to demonstrate their revenue decreased by 70% get financial help. Any entrepreneur knows that even a 10% drop in revenue is problematic. Thus, companies that are in pain of having their revenues cut in half are left in the dark.

According to small business representative and CEO of the Chapel Street site Chrissy Mouse, small business on the legendary shopping street “like walking zombies.” She also said that there is no “compassion, support and concern” from the government.

Even if a company has access to support, it may not be enough. Companies that are optimistic about the future in the coming years clearly need financial support from outside the government.

Do Australians have easy access to small business loans?

Now more than ever, struggling small businesses, backed by courageous entrepreneurs ready to weather any short-term turmoil, are turning to financial institutions and hoping for a lifeline.

But is it easy for Australian entrepreneurs to get a small business loan? Are Australian lenders ready to lend in this volatile environment?

Taulia is located in the United States. financial technology a provider of working capital solutions for Australian businesses of all sizes. The company announced in early August research report that small businesses in Australia are struggling to get affordable finance.

Taulia found that small businesses often have to settle for interest rates that are more than 10% higher than large businesses.

On the other hand, however, another small business fintech lender, Prospa Group, showed a more confident and optimistic tone. In the fourth quarter of the fiscal year (ended June 2021) the company’s profit RefreshProspa reported impressive performance, including:

  • A 51% increase in loans issued to AU $ 182.1 million.
  • Highest quarterly earnings ever.
  • Repeat and repeat customers accounted for half of all shipments.

Commenting on the report, Prospa CEO Greg Moshal said:

“While we are all well aware of the challenges currently facing small businesses in the Greater Sydney metropolitan area, Victoria and South Australia, the SME sector as a whole was on a strong recovery track last fiscal year. A survey conducted on our behalf by RFi Consulting in May 2021 shows that one in four SMEs expects to increase their turnover in 21 fiscal years. For comparison: only 7% expect it to decline over this period. ”

Prosp is required to update the attachment a community with such data because it is a public company. Unfortunately, private companies do not face the same demands, so it is impossible to know for sure if Prosp’s optimism is shared by the entire Australian small business lending community.

Entrepreneurs are better prepared

Compared to 2020, when the pandemic lasted more than a year, motivated entrepreneurs are better equipped to deal with any fallout. Many companies have been successful in adopting the online model or making other necessary changes to adapt to tough times.

There is one compelling piece of information that clearly shows that small business operators are struggling. According to the Australian Banking Association, from 8 July to the first week of August only 600 business loans across the country were on hold. This is a small proportion compared to the 225,000 Australian business loans that were deferred during the same period a year earlier.

CreditorWatch CEO Patrick Coglan said:

“Over the past 12-18 months, businesses have also learned a lot about how to prepare and plan for the future. There has been a big shift towards online, automation and digital … businesses have become much more cost effective. ”

In all fairness, this statement cannot be applied to all businesses. Some entrepreneurs by default, their specific product will be easier to adapt. Many others, especially those who survive through tourism and activities, find it difficult to adapt at all.

Fortunately, Australian small business lenders are showing a willingness to lend capital, so entrepreneurs have a chance to continue their business for years and decades to come.

Bottom line: entrepreneurs will find a way to succeed

Entrepreneurs are one of the most resilient groups of people in the world, and they will always find a way to succeed. There is no doubt that the pandemic has created a scenario that few people business leaders could ever imagine. But a year after the crisis, the business community learned to adapt and develop.

Fortunately, small business loans in Australia are still available for those willing to resist. They are the ones who will overcome short-term challenges and become the business leaders of tomorrow.

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