Australia’s small to medium enterprises (SMEs) are increasingly seeking alternative funding options that don’t tie up their personal assets.

There is a big appetite for borrowing to fund growth, but SMEs struggle to get their hands on it, according to the latest annual SME Compass Report by fintech SME lender Banjo Loans.

The research found that almost one-third (30%) of respondent businesses exceeded their revenue target in the past 12 months, up from 25% the previous year. Key areas of investment were new technology (71%), new assets (67%) and increased headcount (63%).

Banjo Loans CEO Guy Callaghan said small business is back on track but needs better funding options to continue to grow and navigate obstacles like supply chain interruptions and recruitment drought.

With 62% of businesses facing challenges securing funding, the slow pace of big bank processes is cited as the main frustration (23%).

“Australian SMEs are coming out of two years of the pandemic with an upbeat outlook and an eagerness to invest in their business. More companies have acquisitions in their sights, yet many are frustrated by the traditional borrowing process, and not fully informed about the alternative options available to them,” he said.

“With 40% of SMEs still turning to the major banks as their first funding option, this suggests many are yet to understand there are faster and more efficient funding alternatives, that won’t tie up their assets.”

Banjo Loans works with thousands of Australian SMEs, providing unsecured loans to fund investment, with its fintech model enabling lending decisions to be handed down in as little as 48 hours.

“SMEs repeatedly tell us traditional banks just take far too long, and the opportunity cost of not being able to get funding in time can restrict businesses’ growth.  This is why we see so many respondents (20%) saying they reluctantly end up drawing investment from their own personal finances,” he said.

A further 33% will leverage funding from bank loans, while 17% will use credit facilities, like overdrafts and credit cards. Secured business loans and term loans are the most common financial products.