More than one in five (22 per cent) of Australians businesses would use their credit card if they needed additional finance. A further 31 per cent would dip into their savings, while 21 per cent would look at a bank loan and 14 per cent access an overdraft.
This snapshot into borrowing habits has been revealed in the December Sensis Business Index. The survey of 1,005 business owners/managers across all states and across 10 business sectors was conducted by data insights platform Glow in the first week of December 2020. Twenty-two per cent of the businesses survey had 50 employees or more and 59 per cent of businesses had been operating for more than 10 years.
Sensis CEO John Allan said the survey also showed differences in behaviour compared to if you lived in a regional area or the city.
“Fewer businesses in regional areas compared to those in the city will access their credit card (17 per cent to 24 per cent), fewer will take out a bank loan (17 per cent to 24 per cent) or overdraft (12 per cent to 15 per cent) and fewer will access their personal savings 29 per cent to 33 per cent,” he said.
“We believe that shows the more conservative nature of regional businesses.”
The survey also showed:
- Those businesses in NSW and WA were more likely to use their credit card (26 per cent) with the ACT and Tasmania least likely at 18 per cent
- Those in the ACT were most likely to use personal savings (39 per cent) compared to the least likely, Queensland at 26 per cent
When it came to the industry sectors, it was surprising to see that 23 percent of businesses in the Finance and Insurance sector would access their credit card for additional funds. The only sectors that were higher were Wholesale, Transport and Health and Community Services at 26 per cent and Manufacturing at 25 per cent.
Thirty-nine per cent of Finance and Insurance businesses would access personal savings with the only sector higher being Health and Community Services at 41 per cent.
Harder to get finance
More than one in four businesses (26 per cent) said it was harder to get finance than it was two months ago. Conversely, 16 per cent said it was easier. But it also depended on what industry sector you are in.
At 30 per cent of businesses, the Retail sector found it harder than in November (29 per cent). It was one of three of the 10 sectors surveyed that found it harder than in November – Transport going from 25 per cent to 26 per cent and Construction going from 20 per cent to 28 per cent.
Other findings included:
- Regional businesses were finding it harder than their city counterparts – 29 per cent to 24 per cent.
- More South Australian business (37 per cent) were finding it harder followed by 30 per cent in Western Australia, 27 per cent in the ACT and 26 per cent in Victoria.
Have you tried to get finance and were you successful?
- 11 per cent of businesses surveyed said they had tried to get finance in the past month.
- 71 per cent were successful, 19 per cent were knocked back with 10 per cent still pending.
- The 71 per cent approved is a significant improvement on the previous months with just 61 per cent approved in November, 65 per cent in October and 65 per cent in September.
- The 19 per cent knockback in December compared to 22 per cent in November, 20 per cent in October and 22 per cent in September.
Clare is an author, business commentator and passionate contributor to Dynamic Business. She was the Founder and Publisher of Dynamic Small Business magazine, which became Australia’s largest small business publication.