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AUSTRALIAN SMALL BUSINESS LENDING GROWING SCARCE: A POST GFC SCENARIO

Access to additional funding for small business owners plays a significant role in business growth and sustainability. Small businesses, which are a key employment source and an important sector of economic growth, prove to be the bedrock of Australian economic success. 

Access to additional funding for small business owners plays a significant role in business growth and sustainability. Small businesses, which are a key employment source and an important sector of economic growth, prove to be the bedrock of Australian economic success.

Small business owners rely on external funding to help finance almost all aspects of their businesses, from start-up, to business operations support and expansion. However, several economic downturns and the recent GFC have taken their toll on small business lending. Despite a significant number of business owners requiring finance, loans to small businesses seem to be growing scarce, making it difficult for enterprises to acquire additional funding.

Today, many small business owners are in major need of funding as the GFC has undermined financial stability in almost all sectors.  These companies, in an effort to survive, must access additional sources of funding to be successful and sustain their profitability.

So why is it so difficult to acquire this lending from banks?  The vulnerability and volatile revenue streams of small businesses present a high financial risk. Current bank lending standards, high interest rates and widening lending margins account for a number of factors affecting the tightening access to lending. This has severely impacted small enterprises in various sectors over the last few years, especially those who are highly capital intensive such as manufacturing industries.

As a result extra funding is a pressing concern and small enterprises are on the lookout for funding alternatives other than products offered by the major banks. Acquiring alternative sources of small business lending can be a viable alternative for some small business owners.

Have you tried other alternatives to fund your small business?  If so, what method did you use and how did it benefit your company?  We welcome any feedback you would like to share in the comments below.

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