Small and medium businesses struggle to access finance

26 November 2018: The September Quarter 2018 Sensis Business Index, set to be released Tuesday 27 November, has revealed small and medium businesses’ (SMBs) ability to access finance is at a five-year low.

The report, which tracks small and medium business activity, expectations and confidence, found that 31% of SMBs struggled to access finance within the September quarter – dropping a massive 17 points from the results seen in the same quarter of 2017 to a net balance of -17, the lowest recorded since the 2013 June Quarter report.

Sensis Chief Executive Officer, John Allan said: “In the midst of the Banking Royal Commission, these results support fears expressed by small and medium business owners about inability to access finance”.

SMBs in the Finance and Insurance, Manufacturing and Retail sectors found it most difficult to access finance, reporting net balances of -52, -28 and -26 respectively. All states and territories except Tasmania (+7) recorded a negative balance with Victorians struggling the most (-23).

Despite confidence falling significantly across the country (except in Tasmania) with a fall of seven points in confidence from last quarter, SMBs remained positive with the national average sitting at a healthy +42 with 60% feeling confident in their business prospects.

The main reasons provided for feeling confident included healthy/growing sales and specific business strengths. While established businesses were the most confident, many businesses highlighted cost pressures as impacting confidence.

Sensis CEO John Allan believes that the drop-in confidence may indicate growing concerns.

“While we see another positive balance when it comes to confidence, the jump in SMB confidence we saw in the June quarter has dissipated. With the issues around accessing finance featuring heavily in the Royal Banking Commission, it will be interesting to see if this continues to fall.”

The September Quarter study, conducted just a few weeks after the August political spill that saw Scott Morrison take over from Malcolm Turnbull as Prime Minister, also found that SMBs remained confident in the Federal Government – with the net balance remaining +3.

Of those with a favourable view (23%), offering tax cuts, incentives, subsidies and grants as well as benefits such as the $20,000 depreciation write off were the top reasons for their positivity, while those with a negative opinion (20%) were likely to reference too much bureaucracy, high taxation and focus on big business as a driver of their concerns. A further 57% claimed the Federal Government has no impact for their business.

“Despite Australia having five Prime Ministers in just over five years, the majority of small-medium businesses seem to have become resilient to leadership changes, with more than half those surveyed indicating it making no difference to their confidence.”

Access to finance – trends

Sep

17

Dec

17

Mar

18

Jun

18

Sep

18

Last quarter

Relatively easy

34%

26%

25%

19%

14%

About normal

46%

50%

51%

59%

55%

Relatively difficult

20%

24%

24%

22%

31%

*Net balance

+14

+2

+1

-3

-17

Overall confidence – September Quarter 2018

Small business

1-19 employees

Medium business 20-199 employees

Total SMBs

Extremely confident

11%

10%

11%

Fairly confident

48%

69%

49%

Neutral

22%

13%

22%

Fairly worried

15%

5%

15%

Extremely worried

3%

2%

3%

Total confident

59%

79%

60%

Total worried

18%

7%

18%

*Net Balance

+41

+72

+42

/Public Release.