Recent YouGov research estimates that nine million Australians have dreamed of working for themselves and starting their own business. However 60 per cent of these Australians (5.4 million) cited “access to money” as the reason holding them back.
The data in this report shows that many small businesses wait until the last minute to access credit. In 2017-18 nearly 1 in 3 small businesses sought credit to ensure the survival of their business, while 1 in 4 sought credit to replace equipment. Compared to large businesses, small businesses were much less likely to seek credit to upgrade or purchase new equipment.
At the same time, interest rates for loans to small businesses are at an all-time low, and bank approval rates for business loans remain steady. Yet fewer small businesses are approaching banks for credit. Only just over half (57 per cent) of small businesses employing 0-4 people who sought credit in 2017-18 approached a bank.
ABA member data shows a 33 per cent decline in business loan applications over the past five years, while approval rates remain at around 94 per cent.