Affordable Financing for Small Businesses

Small businesses often face challenges when trying to get financing with favorable terms. Common issues include high interest rates, strict approval requirements, and the need to use personal assets, like a home, as collateral. Because of these obstacles, the total amount of small business loans has stayed steady, which means it’s actually declined when adjusted for inflation. However, lending to small and medium-sized businesses (SMEs) has increased recently, growing by 12% over the past year and 25% since 2022, especially in industries like real estate, retail, and agriculture.

Even with this growth, borrowing has become tougher. Lenders are applying stricter standards across various loan products. As a result, many small business owners are choosing to fund their businesses through personal equity rather than risking personal assets for a loan, especially with the current economic uncertainty. About half of all small business loans are secured with residential property, which can help businesses qualify for larger loans if they’re able to provide this collateral.

Another credit source for small businesses is debt owed to the Australian Taxation Office (ATO). During the pandemic, the ATO paused debt collection, leading to a buildup of unpaid debts, with small businesses accounting for the majority of these arrears.

Smaller businesses generally face higher borrowing costs than larger ones, mainly because banks consider them to be a greater lending risk. While this cost gap has narrowed over recent years, small and medium-sized enterprises (SMEs) still pay more on average. The rate difference between large business and SME loans has decreased by about 1.2% over the past two years, largely because rates for large business loans have risen more sharply during recent rate hikes.

This trend is partly due to changes in business size definitions in 2023 and 2024, which reclassified some large business loans as SME loans, bringing down the average SME rate. Increased competition in SME lending, especially from non-bank lenders, has also helped, as has the Australian Prudential Regulation Authority’s reduced capital requirements for SME loans starting in January 2023. While rates on new SME loans have remained stable over the past year, they’ve risen by about 3.65% since April 2022, compared to a 4.15% increase for new large business loans.

At Uptain, we understand the unique challenges faced by small businesses when seeking financing. Our loan solutions are specifically designed to provide flexibility and accessibility, even for new or expanding businesses. Whether you’re looking to refinance, release equity, or secure funds for growth, Uptain’s tailored products ensure your business can thrive without the usual barriers or high-interest rates typically associated with traditional lenders.