Bizcap conducted a survey in partnership with RFI Global to better understand the challenges, lending preferences and financial behaviours of SMEs.

The Bizcap SME Market and Customer Study 2024 revealed major trends in cash flow management, borrowing habits, and barriers to accessing credit. Whether you’re a business owner or a broker, these insights can help you navigate SME financing.

Here’s some of the study’s biggest findings:

1. The biggest challenge: Attracting and retaining customers

  • SMEs identified customer acquisition and retention as their top challenge
  • Cash flow issues ranked in the top three challenges for 20% of SMEs but were secondary to revenue generation.

With increasing competition and changing consumer behaviours, many SMEs struggle to maintain a steady customer base. Marketing costs, shifting industry trends, and economic uncertainty make this an ongoing challenge.

Key takeaway: Businesses need accessible funding to focus on growth rather than just survival.

2. Managing cash flow is time-consuming

  • SME owners spend 13.5 hours per week managing cash flow, nearly 20% of their working hours
  • Across all SMEs, this equates to 34.3 million hours per week.

Time spent on financial admin takes away from core business activities like sales, customer service, and innovation. Many SMEs lack automated systems or financial expertise, making cash flow management a time-consuming necessity.

Key takeaway: Streamlining cash flow processes can help SMEs regain valuable time.

3. How SMEs manage cash flow

  • Most SMEs rely on cash reserves
  • Larger SMEs ($500,000+ turnover) use accountants, budgeting, and inventory control
  • More than 50% of SMEs still struggle with cash flow management.

Cash reserves help businesses stay afloat during slow periods, but they aren’t always sufficient. Many SMEs lack proper forecasting tools, leading to unexpected shortfalls.

Key takeaway: Even well-managed SMEs can benefit from external funding options to smooth out cash flow fluctuations.

4. Personal finances are often on the line

  • 26% of SMEs have used personal savings to sustain their business
  • SMEs with more than $1 million turnover are more likely to use short-term, higher-cost borrowing.

Relying on personal savings puts financial strain on business owners and increases personal risk. Many SMEs resort to this because of limited access to fast, flexible business loans.

Key takeaway: Alternative funding options can reduce the burden on personal finances.

5. Lending preferences: Openness to non-bank lenders

  • Nearly 6 in 10 SMEs would consider a lender they’ve never heard of
  • 4 in 5 SMEs would consider a non-bank lender if a traditional bank can’t help.

Traditional banks have stringent lending requirements, leaving many SMEs searching for alternative solutions. Non-bank lenders offer a more flexible and accessible option, particularly for businesses with limited credit history or urgent funding needs.

Key takeaway: SMEs are increasingly open to non-bank funding solutions, recognising their speed and accessibility.

6. Documentation is a major barrier to borrowing

  • 61% of SMEs with borrowing products abandoned applications due to documentation issues
  • 68% of non-bank borrowers and 53% of bank borrowers think documentation requirements are excessive.

Excessive paperwork slows down the lending process and discourages SMEs from securing the funding they need. Many businesses prefer streamlined, low-doc solutions to avoid the hassle.

As a low-doc lender, Bizcap simplifies the application process, helping SMEs access funds quickly and with minimal paperwork.

Key takeaway: Simplified lending processes increase accessibility and reduce frustration.

7. Why SMEs borrow and what’s holding them back

  • Top borrowing reasons: Working capital, marketing and expansion.
  • Top barriers: High repayment costs and credit score concerns.

Many SMEs seek financing to support growth but hesitate due to cost concerns. Understanding loan terms and repayment structures is crucial for making informed borrowing decisions.

Key takeaway: SMEs need financing options that balance affordability and accessibility.

8. Non-bank vs bank lending: Speed and satisfaction

  • 80% of non-bank borrowers accessed funds within a week versus 75% of bank borrowers
  • 64% of non-bank borrowers were satisfied, compared to 68% of bank borrowers.

Speed is a key factor in SME lending. Non-bank lenders offer faster processing times, which is critical for businesses needing quick financial solutions.

Key takeaway: Non-bank lenders provide a competitive edge in speed and customer satisfaction.

9. SMEs struggling with credit access turn to non-banks

  • 76% of non-bank borrowers faced credit access challenges versus 32% of bank borrowers
  • Most SMEs using non-bank lenders never applied with a bank first.

Many SMEs bypass traditional banks due to strict eligibility criteria, slow processes or previous rejections. This makes non-bank lenders an essential resource for businesses in need of flexible funding.

Bizcap provides funding solutions for businesses that may struggle with traditional bank financing, offering a faster and more flexible alternative.

Key takeaway: Non-bank lenders play a crucial role in supporting SMEs with limited credit access.

How to take action

Recommendations for SMEs:

  • Re-evaluate your funding strategy: Consider alternative lenders if traditional options aren’t working.
  • Prioritise cash flow management: Leverage external financing to reduce time spent on admin.
  • Don’t let documentation hold you back: Look for low-doc lending options like Bizcap.
  • Explore working capital solutions: Use funds to invest in customer growth and retention.

Understanding SME financial challenges and lending preferences is key to making informed business decisions. Whether you need quick funding, flexible repayment options, or a lender that understands your needs, Bizcap is here to help.

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