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SMEs set to lift their online game; women leading the demand for unsecured business loans

It seems SMEs have been slow to get onboard the online boom, with only a little over a quarter of SME revenue coming from e-business, according to new research by Banjo. SMEs are also becoming increasingly frustrated by long waiting times on loan applications, with female SME owners in particular turning away from putting up property as security.

The Banjo SME Compass Report is a result of research among SME owners nationwide in March 2021.  Among the findings were:

  • Just 28% of SME revenue is currently generated online.
  • In the next 12 months, nearly two-thirds of SMEs plan to borrow to drive their growth.
  • 59% of SMEs say onerous lender requirements are a big challenge.
  • Women owners prefer to self-fund their businesses rather than provide assets as security for a loan.

With a little over a quarter of SME revenue currently generated online, business owners are more aware than ever that on the back of pandemic restrictions, e-business must be a key component of their growth strategy.  More than half (52%) intend to increase the proportion of their sales generated through online channels in 2021. And surprisingly, for 14% of SMEs, this year will mark the first time they begin to generate revenue online.

When it comes to borrowing to fund their business growth, a majority of SMEs say that lengthy loan approval times are one of the key frustrations when dealing with a traditional lender. This suggests many are perhaps unaware that there are alternative sources of funds.

The technology used by the new breed of non-bank lenders, many of them fintechs, can gather data about the potential borrower within hours, and dispense with weeks of waiting. Lenders with the right technology can assess a loan application and give a small business owner an answer either way, within 24 hours. Responsible lending and swift approvals are not mutually exclusive.

Diving deeper, the research found a disparity along gender lines when it comes to borrowing. Despite female business leaders being equally motivated to drive growth in 2021 as their male counterparts, they’re much less likely to borrow to fund it.

Female leaders are much more likely to self-fund their businesses, because they are more averse to putting up property, such as the family home, or other assets as security. This is regardless of how large or small their business is. For women, there is also the question of where to turn for unsecured loans.