How access to funding is limiting business growth

January 13th, 2019

Access to capital is the most significant pain point or perceived threat to their long-term growth aspirations, claim 22% of the 500 Australian small business owners surveyed by Xero as part of their recent State of Lending Report.

55% of SME owners claim that finding an affordable loan is their biggest challenge, while 41% say that manually providing their financial information to a potential lender is the most difficult aspect of sourcing additional capital. These are just some of the reasons why business owners are turning away from traditional funding methods and looking to simple, flexible and competitively-priced alternatives.

SMEs are looking to invest – but face limited funding options

Xero’s survey suggests that Australian small businesses would borrow as much as $80 billion over the next 12 months if they had access to funding. Instead, they’re finding it challenging both to source affordable lending options and to meet the application requirements of major lenders - just 8% of small business owners will seek to fund their future growth via a business loan.

Ian Boyd, Financial Industry Director at Xero Australia, said: “Small businesses are the engine room of the Australian economy and most have clear aspirations for growth; however the fact is that access to capital continues to be an issue for many.”

Xero found that a lack of viable funding options means that 67% of small business owners who are focused on growing their business long-term will fund most of this growth using profits, while one in five will rely primarily on personal savings.

Mr Boyd commented: “Accessing finance can be incredibly stressful for small business owners, with it often having significant implications for their future and the future of their workforce.”

Given access to funding, Xero’s respondents reported they’d spend it on:

  • Marketing (61%)
  • Equipment (46%)
  • Hiring more staff (31%)
  • Systems and processes (30%)
  • Materials (25%)

Time poor business owners are struggling with complex loan application requirements

Most small business owners wear many hats – it’s not uncommon for them to act as Director, Head of Operations and Chief Financial Officer in any given day. Time poor, they consider applying for a business loan to be unnecessarily time-consuming and complicated.

80% of the business owners Xero spoke to believe that documentation and other lender requirements when applying for a small business loan are onerous. Of those who had successfully sourced funding, nearly half said that manually providing financials to their lender was the most difficult part of the process.

More than 70% of SME owners would be more likely to apply for business funding if there was an electronic process to make it easy and create the necessary documentation on their behalf. They’re wanting to use technology to simplify the process of obtaining a business loan, with less time and effort spent on their application and having the application approved more quickly major drivers.

Earlypay links to Xero to make applying for funding easy

With many SMEs using cloud accounting software to manage their financials, Xero recognised that allowing lenders to integrate with their software could make the funding application process much easier. The recently launched Xero bank feeds API is a plug-in that enables small business owners to share their Xero financial reports with banks and alternative lenders via secure, permission-based data transfer.

Earlypay is one of the lenders who’s using SME’s financial information from Xero to make it quick and easy for them to obtain access to additional capital. By granting Earlypay access to their Xero information, SMEs can avoid the time-consuming process of manually providing this financial information. It’s simple for business owners to connect their cloud accounting platform (either Xero, MYOB or QuickBooks) to Earlypay and receive funding indication in less than five minutes.

At Earlypay, we’ve supported Australian small business with flexible Invoice finance and Equipment finance solutions for more than 20 years. We understand the funding challenges SME owners face, and we’re working to make it even easier to apply for an invoice finance facility that gives them access to working capital when they need it.

Visit to link your cloud accounting software and see how we can help, or call Earlypay today on 1300 760 205.

If you'd like to learn how Earlypay's Invoice Finance & Equipment Finance can help you boost your working capital to fund growth or keep on top of day-to-day operations of your business, contact Earlypay's helpful team today on 1300 760 205, visit our sign-up form or contact [email protected].