Australian mid-sized businesses leaving banks behind

Businesses are ditching Australia’s big banks and turning to non-bank lenders for finance in droves.

According to the inaugural ‘Non-Bank Business Lender’s Survey’ by fintech broker eBroker.com.au, more than 50% of its loan applicants have previously been declined by a bank.

To further put the boot into the banks, these alternative lenders provide better service with applicants receiving their money in record time. Non-bank lenders are averaging just 2 days for loan approvals and 8 days for funding, compared to a timeframe of “weeks” for the major lenders.

“Our experience shows that a lot of SMEs are struggling to access funds from the banks, but they’re prepared to look for an alternative”, said Wade Doblo, CEO of lender Business Fuel. “The outlook for the [non-bank lender] industry is healthy.”

The survey comes on the back of Paypal recently announcing its lending division had loaned out $85 million to SMEs.

Indeed, the fintech sector is growing exponentially in Australia, with survey respondents saying they were processing combined business loan applications in excess of $1.13 billion each month.

More than 75% of non-bank business lender CEO’s reported demand for their loan products as ‘strong’ or ‘very strong’.” Almost 15% reported receiving 2000+ applications per month.

“Over the past 12 months, we have witnessed a significant transition in the market with a high percentage of businesses now seeking credit through fintech lenders as their first option,” said Jamie Osborn, CEO of GetCapital. “This is a change form 12 months ago and a clear sign that the fintech sector has broken into the mainstream.”

The wholesale trade industry had the greatest demand for non-bank lender loans, followed by construction, and accommodation and food services. Lenders indicated that ‘purchase inventory’, ‘working capital’, and ‘capital purchase’ are the three most common loan purposes.

A recent survey of Australian mid-sized business CFOs by American Express found 60% of businesses find it challenging to access capital for growth.

The eBroker.com.au survey questioned twenty-nine Australian CEOs of non-bank business lenders in May of this year. The 29 lenders each have business volumes ranging from 50 applications per month to more than 2000 each month, and average loan sizes of $5000 up to $250,000.

eBroker.com.au’s fintech app eBroker connects small businesses with unsecured lenders. Business owners can use eBroker to source cash-flow funding, equipment finance, invoice discounting and trade finance. SMEs can access loans up to $1 million.