The unlikely partnership – Aussie SMEs and non-bank financiers…

Published: 17/05/2023

Australians have a volatile relationship with the banks. They undeniably excel in the core services they provide which we enjoy daily. In fact, we can’t live without them. It’s not a want for most, it’s a need.

For Aussie SMEs, dependence on the banks is even greater. Particularly for businesses looking for finance. The latest research suggests that banks issued the majority of SME loans in the last 12 months. The funding provided to these businesses is critically important. It’s used for bulk stock purchases, to plug cash flow gaps or access working capital to fuel growth. Just to name a few use cases. But the list of use cases is becoming increasingly diverse. Large financiers simply can’t keep up with SMEs ever widening set of needs. According to a recent World Bank report, SMEs globally have unmet finance needs to the value of AU$7.8 trillion a year.

Enter non-bank business financiers. They’re etching out an increasingly larger stake in the SME financing market by filling the gaps. As property prices fall, interest rates increase and supply chain issues drag on, it’s making the solutions they provide even more attractive. Non-bank borrowing demand increased again to a record high of 47% market wide, increasing 50% YOY and more than doubling since September 2018.

More Australian businesses than ever are enjoying a digital experience from end-to-end and flexible finance that doesn’t require the family home to be used as security. An asset the banks are less likely to even use given the rapid rise in interest rates and falling property prices. SMEs are seeking out finance that evolves alongside their business as it grows, a faster path to funding and ultimately more time. More time, for SME owners typically means more focus on growing their business. That’s a win for everyone.

Interest in Grapple and the invoice and domestic trade financing solutions we offer has never been higher. Business owners are looking to borrow against the strength of their business and not their personal property, in most cases their family home. Unsurprisingly given the current economic conditions it’s a pretty attractive alternative.

So if we acknowledge this shift in the market what do our beloved Australian banks do when it comes to lending? Continue down the same well-trodden path and double down on mortgage loans to consumers? Likely. Broaden their business finance offering to cater to SMEs evolving set of needs? Historically this would have been unlikely but recently there’s been a pivot in mentality. It ultimately comes back to the enduring wrestle between build or buy. The banks don’t have the technology or the expertise in house. Plus, it would take years to catch up at best. Buy? Only a few have been brave enough to take the leap up until this point but a lot are on the edge with their toes on the parapet.

Grapple is ready to catch those who to decide to take the plunge. Demand to partner or white-label the LendTech platforms we’ve built continues to surge. We’re naturally moving down the path of becoming a partner to banks and larger lenders. Think, [insert name here] Invoice Financing, powered by Grapple. This is a route we’re excited by.

As the line for Invoice Financing provided by FinTech’s like Grapple continues to grow so does our business. Whether that’s for the proprietary technology we’ve built or the funding we’re able to readily provide to SMEs.

We know the current economic conditions are very real for everyone. Thankfully SMEs, Banks and large lenders know our products can help. Grapple can be an important business partner for growth. Our finance solutions, like others provided by non-bank financiers, have been built with Australian SMEs in mind. The very businesses that drive our economy.

Give us a call….we’d love to be your new business partners.

Stephen Dawson, Grapple Founder & CEO