Businesses looking to improve their performance should consider refinancing and switching to another lender to improve their cashflow. A recent small business survey suggests that businesses are more likely to grow, and their chances of survival double, when they work with a finance provider who is more collaborative.
Furthermore, it is estimated that 33% of SMEs have never changed banks and this inertia is a major barrier to change. Businesses will always look to contact their existing bank first when seeking funding and this loyalty has underpinned the sustainability of the banking industry year in year out.
Why are businesses reluctant to look elsewhere and shop around for finance options?
- Banks don’t tend to encourage their customers to go elsewhere when their application is declined.
- The perception that funding options are not always readily available. It is concerning that most businesses believe that it is difficult to obtain finance. This is more apparent in regional Australia where businesses have lower access to finance options.
- The hassle of shopping around as business owners are time poor and don’t have the time to invest in looking for alternative finance solutions.
If it is accepted that all businesses require cashflow to fund future growth, then the failure to ensure their funding structure is fit for growth severely limits the businesses ability to take advantage of opportunities.
The 3 lessons for businesses to realise the benefits of collaborating with the right credit provider are:
- Take the hassle out of the process and engage a finance broker to help you shop around.
- Invest the time to consider the full range of finance providers to get the right fit for purpose.
- Accept that your bank is not the only source of finance and ensure you have prepared a business plan to present to new lenders.
