Online small business lending growing fast
April 17th, 2018 – The online small business lending market in Australia is growing at a faster rate than the US market did at a similar stage of development, the CEO of OnDeck Global has said.
Speaking at the AltFi Australasian Summit in Sydney, CEO Noah Breslow said it could reach more than $2billion in annual originations by 2020.
He said that despite over 6,000 banks offering small business lending options in the US, online lending to small businesses has flourished.
He added: “When you compare that to Australia with a more concentrated banking system, there is even more opportunity for online lenders to provide innovative lending solutions to SMEs.”
Research presented to the summit shows Australia has overtaken Japan to become the second largest alternative finance player in the Asia Pacific region, second only to China.
Breslow continued: “In addition, increased access to data, supportive government initiatives and favourable small business sentiment are all likely to lead to further growth for the industry.
“Furthermore, the Government’s ‘Review into Open Banking’ and the introduction of mandatory comprehensive credit reporting (CCR) will likely promote greater competition in the Australian market.”
Yet despite the Australian market’s growth potential, awareness of alternative finance sources still remains an issue, according to OnDeck’s latest Small Business Owners’ Survey, commissioned by research firm YouGov Galaxy.
Only 30% of small business owners thought the number of lending options had increased over the past five years, compared to 70% in the US.
Sixty-three percent of small businesses have been heavily reliant on traditional banks, followed by 29% on specialist financiers, 27% on credit unions and 27% on family and friends, to source finance.
Written by Australian Broker
Photo: Colonial Wallet Wisdom
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