Non-banks increasingly popular with SMEs: ScotPac

That figure now exceeds SMEs’ preference for bank borrowing, which declined by 4 per cent year-on-year to 28 per cent.

In particular, respondents said non-bank lenders were generally “twice as fast at approving loans than banks”, with average bank loan approvals stretching to 35 days, and in some cases, beyond 55 days.

The report, which included feedback from more than 700 SMEs, found that frustration with bank onboarding processes and approval times were a key driver for the decline in banks’ preferences.

ScotPac chief executive Jon Sutton said “excessive documentation” and drawn-out approval times are “pain points” that add to the time and stress of running a business.

“They want hassle-free financing, personalised service and fast and responsive turnarounds to match their cash flow needs,” Mr Sutton said.

The report also found, that the drive to invest in SMEs hasn’t gone away, with 55 per cent of respondents planning to invest in their business in the next six months.

In addition, 41 per cent said they will seek new funding options in 2022, on average applying for $753,000 in funding.

The average forecast loan size for large SMEs is between $5 million to $20 million, compared to $1 million to $ 5 million for smaller SMEs.

SMEs invest in their future, amid rate hikes

Despite the rising environment and cost of living Mr Sutton said it was “pleasing” to see more than half of the SMEs surveyed confident to invest in their businesses in the next six months.

The Commonwealth Bank of Australia’s data revealed similar optimism on the future outlook for SMEs, with 67 per cent of businesses budgeting for new equipment in the next 12 months. And 55 per cent of those businesses specifically planned to invest in IT and office technology.

Government incentives such as the instant asset write-off scheme, extended until mid-2023, new tax incentives to encourage small businesses to invest in technology and training and new interest rates from CBA for its SME recovery loans had played a role in lifting business investment, the report found.

The federal budget included measures that allow small businesses to receive a $120 tax deduction for every $100 they spend on training staff or investing in technology up to a maximum of $100,000 a year.

In addition more recently, the federal government delivered draft legislation to introduce a technology tax incentive for small to medium businesses, to support digital adoption by SMEs.

The Technology Investment Boost would provide a bonus of 20 per cent tax deduction for eligible expenditure incurred on expenses and depreciating assets that support digital operations.

[Related: Tax incentives for SME tech investors]