Small businesses reveal what's hurting their recovery

By Katherine O'Chee · · 3 min read
Fact Checked
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Small business woman stressed over cashflow issues

As small businesses grapple with the uncertainty of operating amid COVID-19, new research shows cashflow remains the biggest barrier to recovery. 

For 1 in 3 small business owners, cashflow sits top of mind as their primary worry, according to figures released by business lender Finstro this week.

This is based on surveys with 1,200 Aussie small businesses in July, just before Victoria’s second pandemic wave worsened. 

Finstro’s chief product officer, Tom Whitworth said these concerns around cashflow reflect the “payments crunch” that many small to medium-sized enterprises (SMEs) face right now. 

That is, there’s a real struggle to balance slow-paying customers with suppliers requesting faster payment times. 

“Suppliers, who are rightly concerned about securing payments in this challenging environment are increasingly demanding shorter trade terms and often cash on delivery,” Whitworth said. 

“This makes it difficult for small businesses who are looking to order supplies and reinvigorate their businesses after a period of significantly reduced trade or shutdown.”

Business loans: A way forward

So, if you’re concerned about your business cashflow what are your options? 

For some SMEs, business loans offer a way forward. They’re a handy way to access extra finance to help kickstart operations again and grow your company in a COVID-safe environment.

But it’s important to note there are many types of business finance and the best one depends on your situation. Read on for a few key options:

Standard business loan

This is a lump sum paid upfront, so generally it suits businesses that have a clear idea of the exact funding they need for purchases like stock or equipment. To cater for different business sizes and purposes, these loans can often range from as little as $5,000 up to $500,000 or more and be borrowed over months or years. 

Right now, accessing this option could also be easier, thanks to the SME Loan Guarantee Scheme. Under this scheme, the government is guaranteeing 50% of unsecured business loans of up to $250,000 issued by eligible lenders, until 30 September 2020 (after that, phase two begins where even larger loans will be guaranteed).

Line of credit

But what if your cashflow is uneven and you can’t predict when or how much you’ll need over the coming months? 

That’s when a line of credit could be helpful, as it’s an ongoing loan facility that you can draw down upon whenever needed. 

The good news is you’ll only be charged interest on the amount you take out. For this reason, a line of credit serves as a great financial safety net, in case further COVID-19 restrictions or challenges disrupt your revenue levels.

Invoice finance

If you’ve got unpaid invoices (or accounts receivables) tying up some of your working capital, then invoice financing could be your go-to. 

With invoice finance, you’ll receive a portion of the invoice amount (usually up to 80-95%) from your lender upfront. Then, once your customer’s payment comes through, the rest of the funds will be released to you - minus interest and any fees. So instead of waiting for weeks for your invoices to come through, invoice finance can give you access to that money almost instantly.

Like a line of credit, this option provides you with a drawdown facility.

Your next steps

Once you’ve figured out which financing option is right for your business, it’s time to weigh up a bunch of other features including interest rates, fees and funding speeds. 

Scroll down below to start comparing deals today, or jump on over to our business loans comparison page for a more comprehensive list.

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    About Great Southern Bank
    Business+ Unsecured Loan

    A simple way to fund your business’s big plans. Borrow up to $50,000 without using your assets as security. A fixed interest rate means your repayments don’t change over the life of the loan. Apply in minutes with the Business app. Enjoy a fast approval process. $495 establishment fee.

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    About Bizcap
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    Business Loans from $5,000 to $2,000,000 with high approval rates. Access to funds in as little as 3 hours. Cash flow friendly repayments and open minded offers.

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    About Lumi
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    A straightforward business loan with no hidden Lumi fees or charges. Speedy application and approval process with fast access to funds according to Lumi.

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    About Great Southern Bank
    Business+ Unsecured Overdraft

    Manage the cash flow in your business with ease. Access up to $50,000 without using your assets as security. Lending criteria apply. Access your available limit from your linked Business+ Account. Use your Debit Mastercard for added convenience. Interest is charged on your balance owing, not your limit. Easy online application. $495 establishment fee.

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    About ScotPac
    Boost Business Loan - powered by Business Fuel

    Get secured or unsecured business funding for up to $250K. For loan terms of 6 months to 2 years. No application or account keeping fees to pay. Minimum loan amount is $10,000. Get approval in 24 hours. Loans over $100,000 require security. Minimum annual turnover of $120K.

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