4 SME Business Lending Trends that will Rock 2020
Posted by Marketlend Australia on March 28th, 2020
The Australian economy has seen lots of SMEs emerging in a short timeframe. In fact, small to medium businesses make up a large chunk of our economy. There is a tremendous amount of potential in this sector. However, sourcing capital can be a challenging task.
If SMEs are unable to access capital, it becomes difficult for them to take advantage of growth opportunities. An example is not being able to take on a new client if they cannot afford to buy the inventory needed to complete the job upfront. This is a perfect example of a mismatch in cash-flow timing.
Mismatches in cash-flow timing can hurt SMEs in the long run. Sometimes businesses get stuck in the unending cycle of recurring unpaid invoices. Such a situation can prevent them from having adequate cash to procure a new inventory and execute new orders.
Whether you are a tradesperson, a restaurant owner, a manufacturer or a start-up founder, there are few businesses that escape mismatches in cash-flow timing. This is where SME business lending can come in handy - relieving your cash-flow issues and your stress levels!
The good news is that there are a number of business lending options available that can be tailored to meet your needs. Let’s look at some of the SME business lending trends that will rock 2020.
Lending to Cover the R & D Tax Incentive
If you are a start-up founder at the commencement of your business journey and have asked your friends and family for cash, the R & D tax incentive can be a great help. Offering a tax rebate for eligible R & D activities, this government incentive has been developed to give impetus to your business growth and encourage entrepreneurship.
The incentive is available for only a select few companies, which means it is essential to do your research into the types of industries and sectors that are eligible. While you are required to go through a lengthy application process, it can be well worth it if you do fulfil the eligibility criteria.
You may also experience a delay in processing of your application. This can result in a mismatch in cash-flow timings, for example if you need to pay salaries and you are waiting for approval.
In such a scenario, Marketlend, an expert in marketplace lending in Australia, can help you by lending you the amount of your R & D claim upfront.
Existing players have been pressured to be more open about the real cost of finance solutions. This has resulted in the emergence of simplified interest rates. Lenders are providing clear-cut interest rates, without any add-ons that can affect the loan cost.
SME owners have become used to fees and penalties for early repayment. However, very soon, you will be able to say farewell to these. With the help of greater transparency, you have the opportunity to find competitive offers and narrow down your options. Being able to compare offers means you have more power to choose the right loan for your circumstances.
The lending process from initial research to settlement can be notoriously slow for SMEs. In 2020, we will see online lenders and smart business loan marketplaces executing time-saving processes like linking directly to cloud software with the help of online application forms and pulling bank statements directly from the web. This assists in making quick decision-making.
Flexible Repayment Options
Traditional loans typically have a fixed repayment option. This means you simply pay the amount on the nominated date. However, this system favours the lender. Clauses such as early repayment penalties and renewal fees charged if you want a longer term discourage you from making quick repayments.
Modern financial technology has started to intervene in this process by allowing the loans to be repaid at the discretion of the business owner, without incurring charges and fees. It is now possible to build flexibility into the terms of the product, which helps in administrating irregular payments, renewals, and early repayment without putting an additional administrative burden on you.
These four trends are not exclusive. There may be other trends that emerge this year to add to them. If you wish to learn more about upcoming trends about peer to peer lending in Australia,contact us today!