Almost half of Australian SMEs are now using some form of asset-based lending as businesses increasingly look beyond traditional bank finance to unlock working capital and support growth in a volatile economic environment.

New research from bi-annual SME Growth Index Report found 49% of SMEs have adopted asset-based lending solutions within the past two years, including 26% who entered the market in the past 12 months alone.

The research also points to strong momentum ahead, with 28% of SMEs planning to adopt an asset-based lending solution in the next year, led by larger SMEs seeking more scalable and flexible funding structures.

ScotPac CEO, Jon Sutton said the findings reflected a major shift in how SMEs are thinking about capital management and business resilience, particularly in the context of local and global economic uncertainty.

“SMEs are increasingly recognising that valuable capital is often sitting idle on their balance sheet, tied up in invoices, equipment, inventory or other assets,” Mr Sutton said.

“Businesses want funding structures that can flex with their operations and grow alongside revenue, while also providing greater cash flow stability during uncertain periods.

“In an environment where businesses are managing rising costs, supply chain challenges and more cautious bank lending conditions, asset-based lending is becoming a core funding strategy rather than a niche product.”

The research found that 89% of SMEs either currently use or would consider using asset-based lending, highlighting the significant potential for growth from 49% adoption today.

Brokers are also playing an increasingly important role in the market, with 65% of SMEs now turning to brokers for support with asset-based lending decisions.

Mr Sutton said brokers were well placed to help SMEs better understand the range of funding solutions available beyond traditional secured lending.

“There remains a significant awareness gap, particularly among smaller and micro-SMEs that may not fully appreciate how existing business assets can support access to working capital,” he said.

“Brokers who proactively educate clients about balance sheet funding opportunities can play a critical advisory role for SMEs who are currently navigating a complex operating environment.”

The research revealed awareness levels were strongest among larger SMEs, with only 5% reporting no knowledge of asset-based lending, compared with 13% of micro-SMEs.

Mr Sutton said demand was increasingly being driven by businesses seeking more integrated and flexible funding solutions that avoid overreliance on residential property security or personal guarantees.

ScotPac’s Asset Based Finance solutions allow businesses to leverage a combination of assets – including inventory, debtors, property, plant and equipment – within a single flexible funding structure designed to improve liquidity and support growth.

Key SME Growth Index findings:

  • 49% of SMEs have adopted some form of asset-based lending in the past two years
  • 26% entered the market within the past 12 months
  • 28% plan to adopt asset-based lending solutions in the next 12 months
  • Just 11% of SMEs ruled out considering asset-based lending
  • 65% of SMEs now use brokers for support with asset-based lending decisions
  • Awareness gaps remain highest among micro-SMEs.

About the SME Growth Index

  • Commencing in March 2014, ScotPac’s twice-yearly SME Growth Index is Australia’s longest-running research report on SME sentiment towards revenue growth prospects.
  • The Round 24 research was conducted by East & Partners who interviewed 728 SME enterprises with annual revenues of A$1-20 million.
  • SMEs surveyed have operated continuously for an average of 16.3 years and manage, on average, 51 full-time equivalent employees.
  • Sectors represented in the survey included Property & Business Services (14%), Wholesale (13%), Manufacturing (12%), Retail (10%), Transport & Storage (10%), Personal & Other Services (10%), Construction (10%) and other industries including Mining & Resources, Agriculture / Forestry / Fishing, Media & Telco, Accommodation, Cafes & Restaurants, Finance & Insurance (non-bank) and Electricity, Gas & Water.

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ScotPac is Australia and New Zealand’s largest non-bank SME business lender, providing funding to small, medium and large businesses from start-ups to enterprises exceeding $1 billion in revenues. For over 35 years, ScotPac has helped thousands of business owners succeed, offering fast and flexible funding. From simple to complex, small to large, start-up, growth or turnaround – ScotPac can help with a range of funding including Invoice Finance, Trade Finance, Asset Finance, Line of Credit, Business Loans and Asset Based Finance. ScotPac was recently awarded The Adviser Magazine’s Debtor Finance Loan of the Year for a sixth time.

 

For more information contact:

Todd Hayward
Mob: 0412 205 151