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1 in 8 SMEs failed to access additional funds: ABS

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Malavika Santhebennur 6 minute read

Around one in eight SMEs who sought additional funds over the last three months had been unsuccessful in obtaining the funds, according to ABS data.

The Australian Bureau of Statistics (ABS) has released its insights into Australian business conditions and sentiments for May 2021, which revealed that 8 per cent of all businesses sought additional funds over the last three months, down from 14 per cent in February.

The ABS figures showed that 7 per cent of small businesses (those with zero to 19 people employed) sought additional funds during this period (down from 14 per cent in February), while 14 per cent of medium businesses (those with 20 to 199 people employed) and 10 per cent of large businesses (200 or more people employed) sought additional funds.

However, 13 per cent of small businesses, 12 per cent of medium businesses, and 13 per cent of all businesses reported that they had not been successful in obtaining the funds, the ABS said.

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According to the ABS, businesses that were most likely to have sought additional funds over the last three months were from industries such as arts and recreation (39 per cent), education and training (20 per cent), electricity, gas, water and waste services (19 per cent), and mining (18 per cent).

Meanwhile, 43 per cent of businesses reported that their cash on hand could cover three months or more of business operations, while 25 per cent of businesses reported that cash on hand was lower than usual for this time of year.

A quarter of small businesses, 19 per cent of medium businesses, and 15 per cent of large businesses reported that cash on hand was lower than usual for this time of the year.

According to the ABS head of industry statistics, John Shepherd, many of these businesses commented that conditions such as decreased demand, decreased revenue and COVID-19 restrictions had impacted their cash reserves over the year.

However, 14 per cent of businesses reported that cash on hand was higher than usual, citing that positive revenue and demand conditions, along with support measures, had helped sustain cash on hand.

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A total of 14 per cent of small businesses, 21 per cent of medium businesses and 20 per cent of large businesses reported that cash on hand was higher than usual, the data showed.

In May, large businesses were the most likely to report having at least six months or more cash on hand available (45 per cent), compared with medium businesses (27 per cent) and small businesses (24 per cent).

The ABS reported that 62 per cent of the arts and recreation services industries, 60 per cent of wholesale trade, 57 per cent of transport, portal and warehousing, and 54 per cent of the construction industries reported that their cash on hand could cover less than three months of operation.

One in five businesses (20 per cent) reported to have stopped accessing at least one support measure since March, with 17 per cent ceasing access to government subsidies such as JobKeeper, or Supporting Apprentices and Trainees, 4 per cent stopping access to renegotiated property rent/lease arrangements, and 3 per cent ending access to deferred loan repayments, the ABS figures revealed.

One-fifth (20 per cent) of small businesses, 23 per cent of medium businesses and 22 per cent of large businesses reported ending access to support measures.

A total of 22 per cent of small businesses, 29 per cent of medium businesses and 15 per cent of large businesses reported that they were impacted to a great extent by ending access to support measures. This could have included significant impacts on business finances and/or number of employees, the ABS said.

Of the businesses who ended accessing support measures, 29 per cent reported changing quantity orders of inputs, 22 per cent reported reduced staff hours, 15 per cent reported that they renegotiated rent/lease arrangements, while 11 per cent reported that they reduced staff numbers, 11 per cent increased prices, and 10 per cent said they deferred or cancelled investment plans.

Overall, more than three-quarters (78 per cent) of businesses reported either no change or increased revenue in May, which has remained unchanged from April, the ABS reported.

[Related: Strict policy and turnarounds are top finance barriers, say SMEs]

1 in 8 SMEs failed to access additional funds: ABS
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Malavika Santhebennur

Malavika Santhebennur

Malavika Santhebennur is the features editor on the mortgages titles at Momentum Media.

Before joining the team in 2019, Malavika held roles with Money Management and Benchmark Media. She has been writing about financial services for the past six years.

 

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