Affordable Capital for SME Growth

Affordable Capital for SME Growth

Affordable Capital for SME Growth

The Australian Small Business and Family Enterprise Ombudsman recently released the ‘Affordable Capital for SME Growth’ report.

The report highlights current issues facing Australian SMEs when it comes to accessing finance for their businesses. It also confirmed what we already knew!

We’ve taken the opportunity to share with you the facts from the report, along with some simple solutions to the stressful matter of obtaining finance.

“Across our economy, it is recognised that small to medium enterprises (SMEs) – businesses that employ less than 200 people – drive growth. Our SMEs represent over 99 percent of all businesses, contribute 57 percent of the GDP, and employ over 7 million Australians – 67 percent of total employment.

SMEs rely on finance to start, operate and grow their business. As emphasised in our ‘Barriers to Investment’ report, sources of capital for growth are scarce and expensive.” Kate Carnell AO, Australian Small Business and Family Enterprise Ombudsman.


  • The majority of SME owners work seven hours overtime per week
  • 56 percent run by millennials or Gen Xers
  • SMEs contribute $614.96 billion to the Australian economy
  • 50 percent of SMEs have been in business for less than 10 years
  • SMEs are responsible for 67 percent of all employment in Australia
Affordable Capital for SME Growth


Cashflow – as you well know – drives your day-to-day business operations. It also lets you maintain your business’ assets and grow the business.

Show me the money! I hear you say. From our experience, many small (in particular) and some medium businesses simply can’t access extra cash to meet their business goals.

You’re not alone … in case you were wondering. You’re one of a significant group of Australian business owners unable to access capital due to current market conditions.

The Australian Small Business and Family Enterprise Ombudsman report indicates that access to capital (or a lack of) is now a major problem facing SMEs.

Barriers to capital outlined in the report were:

  • Limited competition in the lending market – and risk-weighted appetite
  • focussed on real estate – limits lending to SMEs.
  • Prohibitive interest rates and strict terms offered by non-bank lenders.
  • Lack of appetite for SMEs by equity investors looking for rapid returns.

The RBA further identified ‘the reduction in the risk appetite of lenders following the global financial crisis appears to have had a more significant and persistent effect on the cost of finance for small business than large business’.

It also noted that the four major Australian banks hold an 83 percent share of the small business loan market. And financial lending outside of this prudentially regulated sector is very small.


External funding for a business can be in two forms, debt or equity.

Debt – where a lender provides capital for a fixed term and it must be repaid in full.
Equity – where investors provide capital in exchange for shares in the company.


Basically, the situation is this if you want capital from a lender, and not shareholders (via equity lending) you need to put up the freehold business or family home as security.

This is no guarantee that finance will be approved, and turning to equity may not result in obtaining the funds you want either.

With only two options for finance, which both involve risk and come at a cost to your business, what alternatives are there?

One viable option that’s always available to you is to take control of your business. Through better financial planning, tax optimisation and leaner, cleaner business operations.

It’s a slower burn and requires discipline, but ultimately makes you a better operator and your business more competitive

Affordable Capital for SME Growth


The report suggested that SMEs should ‘seek capital before it’s needed’ and to work with their trusted advisers to get their business finance-ready.

The example cited in the report was ‘if the intention is to expand into a new location in the next 12 months, finance should be sought while the business is profitable, rather than a week before a contract with a developer is due to be signed’.

In other words, how solvent does your business look on paper right now?

Whatever finance you apply for (now or in the future), you need to provide specific documentation to prove you can service the debt, or provide shareholders with profit.

Evidence such as a record of performance, business plans, financial statements, income tax returns, ATO Notice of Assessment, and cash flow projections are standard.

If your business doesn’t have these kinds of records, it should! This information is not just a requirement for lenders, but it equips your business with the insights it needs to be viable.

The ATB team have nearly 20 years’ experience helping SMEs survive and thrive. Through our 5-Step Process, we can …

  1. Find out what’s important to you and your business
  2. Prioritise your business goals so they’re achievable
  3. Develop a strategy to achieve those goals
  4. Implement the plan
  5. Measure the results

We can help you build a solid business foundation by covering all the basics and pointing out areas for improvement. Individual members of our team can assist you with certain tasks.

Whether its getting setup and tutored on cloud-based accounting or POS software, business mentoring, wealth or tax planning, and virtual CFO services.

“Owner of car A says it runs well, whereas owner of car B can demonstrate it runs well, as they have log books and a service history. Which car would you buy?” Marc Johnstone, CEO, SME CrowdFunder


A study undertaken in New South Wales indicated that SMEs are four times more likely to be rejected for lending than large businesses, and 30 percent more likely to be rejected for equity finance. Source: Jobs for NSW, Market Opportunity Analysis Financing for SMEs in NSW, 20 September 2017.

59 percent of local business operators’ work more than 35 hours per week, with almost a quarter working over 45 hours, and 3 percent of SMEs working more than 65 hours per week.



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