There has been an increasing demand for loans to small businesses despite the outlook for inflation and higher interest rates, according to two top non-bank lenders.
Read more: Small business pulse strong at non-banks
Nick Reily, head of partnerships at OnDeck Australia, said the non-bank is seeing a significant uptick in small businesses for cash flow business, which the team believes “reflects businesses embracing opportunities for growth as the economy rebounds and the market returns to more normal trading conditions.”
In 2022, OnDeck has seen a 48% uptick in loan originations compared to the previous year, along with an increased number of small businesses applying for finance to invest in plant and equipment as well as training and tech, partly to take advantage of the supersized tax deductions announced in late March in the federal budget. Other non-banks expect the positive trend to continue moving forward.
John Clifford, head of third party at non-bank Lumi, said businesses would likely “seek larger funding amounts as business and consumer confidence increases.”
Some expectations would be focused on the ease and convenience of the lending solutions that have emerged in the pandemic years – many of which are still under the radar for small businesses.
“Demand for modern tech-enabled business funding will continue to grow as awareness of the solutions available to businesses grows,” Clifford said.
Lumi has seen significant growth in demand for short-term finance solutions since November with the easing of COVID restrictions.
According to the latest May Business Conditions and Sentiments government survey, small businesses are about twice as likely as large ones to have higher-than-usual planned expenditure. Even so, stats found that a mere 8% of small businesses had sought funding increases over the past three months, down from 12% in the February survey and 14% in the February 2021 survey.
It’s a worrying sign that the increase may not last in the face of inflationary pressures and further interest rate hikes. There are high hopes, however, that commercial lending can play a larger role in the economy as the steam comes off the housing market.
