SME priorities when seeking finance

So, what are the key factors that small businesses prioritise when seeking a business loan?

1) Flexibility in Loan Terms

Small businesses value flexibility in loan terms to accommodate their unique financial circumstances. Most banks have very rigid lending criteria which makes it difficult for a small business to find a loan that suits them. One of the key things that a bank looks for when assessing a loan is the ability for a business to be able to service the loan on a monthly basis, which is often very difficult for a business to prove, especially if they have lumpy cash flow, or were impacted by Covid in the past. By having the ability to structure the loan in a way that aligns with their cash flow, businesses can better manage their finances and meet their repayment obligations.

2) Competitive Interest Rates and Fees

Interest rates and fees are critical factors for small businesses when considering a loan. Competitive rates can significantly impact the affordability of borrowing, allowing businesses to allocate funds more effectively. However, a common mistake made by borrowers is to think that the lowest interest rate is the best interest rate. It is important to look at the total cost of the loan, including upfront and exit fees as well as ongoing interest rate. Once they look closer at the fees and ongoing repayments, they might find that a higher interest rate actually makes more sense in terms of the overall cost of the loan.

3) Quick and Efficient Application Process

Time is of the essence for small businesses, and a lengthy loan application process (and lengthy response times) can be detrimental to their growth plans. Small businesses appreciate lenders that offer a streamlined and efficient application process and those that get back to them straight away. Digital platforms, simplified documentation requirements, and expedited approval procedures help businesses secure the necessary funds promptly, enabling them to seize opportunities in a timely manner. At PMA we have a 4-hour response time guarantee once a Quick Application is submitted and we can settle a loan within 5 days if we receive all the required paperwork.

4) Accessible Loan Amounts

Small businesses require access to loan amounts that align with their financial needs. The ability to borrow sufficient capital enables businesses to invest in growth opportunities, purchase inventory, hire additional staff, or upgrade technology when they need to. Lenders that offer a range of loan amounts cater to the diverse needs of small businesses and position themselves as valuable partners in their growth journey.

5) Transparency and Clear Loan Terms

Transparency in loan terms is crucial for small businesses to make informed decisions. Clear communication about interest rates, repayment schedules, penalties, and any additional fees ensures that businesses have a comprehensive understanding of their financial obligations. Small businesses appreciate lenders that prioritise transparency, as it builds trust and establishes a solid foundation for a successful borrower-lender relationship. At PMA we have many return borrowers that value our service so much they keep coming back for additional loans.
Personalised Customer Service

6) Small businesses value personalised customer service from lenders.

Dealing with a lender who takes the time to understand their unique business needs and challenges allows them to develop a mutually beneficial relationship. Being able to communicate directly with loan officers, receiving prompt responses to inquiries, and having access to knowledgeable support helps small businesses navigate the loan process more effectively.

New trend in the lending market

While there are many factors small businesses look for when trying to secure funding, the reality is that the availability of money through traditional finance channels has become more difficult to access as rising interest rates make servicing a loan harder. This limited supply from traditional finance institutions like banks have led to an increased demand for private lending.

According to the Reserve Bank of Australia’s Financial Stability Review, non-bank lenders have seen a 25%-growth in business credit on a six-month annualised basis in early 2023. Based on the recent trends, it’s clear that SMEs have been more than willing to investigate alternative sources of funding.

How can brokers and accountants capitalise on this trend?

Brokers and accountants that are partnered with private lenders give themselves better chances of diversifying their service offering to their commercial clients and providing them with a solution that they most likely would not be aware of. The more funding options available, the better the chances of finding a tailored finance solution for their clients and further enhancing the relationship.

By understanding the priorities of each business client, brokers and accountants can help source out the funding options that best match the needs of their clients. This helps businesses save time searching for funding opportunities and subsequently having to review each option.

How PMA can help brokers and accountants

Private Mortgages Australia specialise in providing flexible and tailored business finance solutions that can address the unique needs of commercial ventures. PMA uses its own dedicated funding pool to provide certainty when lending. PMA’s team of experts understands the intricacies of the market and understands that there is no one-size-fits-all approach. Each business is unique and the team at PMA is dedicated to working with brokers, accountants and their clients to provide customised financial solutions that align with their goals.

We at PMA pride ourselves with our quick response time. We also provide generous referrer fees within 24 hours of a loan settling with no clawbacks!

If you are a broker or an accountant and have a business lending scenario you would like to discuss, feel free to contact us or you can complete our Quick App form here (< 10 mins)