The Government SME Guarantee Scheme and extended trading terms are failing Australia’s SMEs, amid the Coronavirus pandemic

FOR IMMEDIATE RELEASE

Tuesday 6 October 2020

Invoice finance business Apricity Finance warns of the issues faced by SMEs amid the Coronavirus pandemic, and says businesses remain concerned about staying afloat as they struggle with a range of issues related to gaining access to finance and government funding.

A recent poll of the business finance broker community, commissioned by invoice finance specialists Apricity Finance, has demonstrated that SMEs are facing key cashflow challenges as they struggle to survive. The data shows there is an uplift in demand for finance and funding, however this is as difficult as ever for businesses to access.

The people that small business owners turn to for independent advice believe that access to finance is only getting harder for SME businesses. With brokers being one of the first places that small businesses turn to when looking for finance, they get a true cross-section of the issues faced by the sector.

The research demonstrates that 45 per cent of brokers felt that their clients are seeing trading terms ‘becoming longer dated’ and 45 per cent said trading terms ‘remain the same’, meaning that 90 per cent of businesses are feeling pressure on cashflow as a result of long payment terms. When money is tight, it’s common for debtors to seek to widen the gap and demand extended payment terms from their suppliers. And now, according to the survey data, it’s being used as a tactic by big firms to delay making payments.

Small businesses have endured the toughest trading conditions Australia’s seen in living memory over the past few months and the sad reality is that not all of them will survive. Poor cashflow is the primary reason for insolvency in Australia, and delayed trading terms is a key factor when it comes to poor cashflow.

Additionally, the survey exposed that a mere 30 per cent of SMEs have had success in applying for the Coronavirus Small and Medium Enterprises (SME) Guarantee Scheme. The response indicates that SMEs are looking to other funding alternatives such as using personal funds or drawing down cash reserves, as well as taking other business measures like downsizing operations and reducing staff expenses.

Linden Toll, CEO at Apricity Finance says that “while the scheme came from good intentions, it is ultimately failing SMEs, at a time when they need support the most. The $40 billion unsecured loan program for SMEs was unveiled earlier this year to improve access to finance for small businesses during the pandemic, but access is proving very difficult.”

The government is currently working on an expanded second phase of the scheme that began on October 1 2020.

Mr Toll continues, “Our research has shown that brokers are concerned about the increasing number of small businesses suffering from cashflow challenges and the capacity of those businesses to access finance in a post-coronavirus landscape. These cashflow concerns are largely driven by late invoice payment terms, and inability to access funding when it is needed.”

While the situation is dire for many small businesses, the freight and logistics industry has seen a silver lining to the pandemic. Confined to their homes during lockdown, Australians have relied on transport more than ever to deliver their groceries and other essential goods, in the face of unprecedented consumer demand.

The data from Apricity Finance’s Broker Survey cements this. When participants were asked whether they were seeing a growth in demand for particular industries, the response was an overwhelming 70 per cent in response to freight and logistics. This was in comparison to infrastructure, mining and retail manufacture.

As expected, SMEs supplying goods or services to the infrastructure and mining sectors remained solvent and growing with Government stimulus to each. With growth comes the need for finance options which in the mainstream banking system remains difficult.

For more information on Apricity Finance, visit https://www.apricityfinance.com/ 

-ENDS- 

For media enquiries please contact Apricity Finance:

Liese Roylance | 0414 543 732 | liese@apricityfinance.com

Bella Cummins | 0410 038 878 | bella@apricityfinance.com 

Suite 11, 328-332 Bong Bong Street, Bowral NSW 2576

About Apricity Finance

Apricity specialises in a single product – known as invoice finance (or debtor finance). Their solution allows approved businesses to have the invoices to their high credit quality customers paid faster. This reduces frustrating wait times and provides cash flow certainty. Founded by a team of experienced investment management and finance professionals, the first office opened in New South Wales’ Southern Highlands in 2013. In 2016, Apricity opened offices in Brisbane, Melbourne and Auckland.