Over one-third of Australian SMEs are open to exploring their funding options with non-traditional lenders, according to a new report.

More than one-third of small and medium-sized enterprises (SMEs) across Australia could be soon veering away from traditional banks, according to new findings released by FICO.

This data is derived from an RFI Global analysis of two years’ worth of SME Banking Council surveys, which included responses from 508 Australian SMEs.

According to the results, 38 per cent of the Australian SMEs said they would consider alternative or non-traditional lenders in the future.

The same data also noted that, as of December 2021, 15 per cent of these SMEs said they were interested in taking up new borrowing products over the next 12 months.

One explanation for this trend, as suggested by this report, is that SMEs were growing frustrated with the funding process of traditional banks.

As referenced in the FICO’s release, 45 per cent of Australian SMEs expressed that competitive interest rates were a top driver when choosing a lender.

Speed of access to funds (35 per cent), flexibility in repayment options (32 per cent), digital banking capabilities (27 per cent) and the ease and speed of the application experience (24 per cent) were also listed as key decision factors for SMEs.

FICO senior director of decision management solutions in Asia Pacific Aashish Sharma said that the COVID-19 pandemic put a “sudden, massive burden on SMEs, globally” and that they didn’t believe the banks did enough to assist them over this period.

Australia’s SMEs have made it clear that should they require financial support in 2022, they are less optimistic about getting it from their main banks. SMEs account for more than 97 per cent of all businesses in Australia, and contribute around $418 billion to Australia’s GDP, equivalent to over 32 per cent of Australia’s total economy.

According to the Australian Small Business and Family Enterprise Ombudsman’s Small Business Counts December 2020 report, small businesses accounted for between 97.4 per cent and 98.4 per cent of all Australian businesses.

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