Number of SMEs growing, despite economic challenges, ABA report

The ABA has today released its 2022 Small and Medium Enterprises Lending Report, which found the number of SME’s expanded across Australia despite the challenging economic conditions.

The Report found the number of micro businesses grew 10% to 1.55 million in the year to June 2022. During the same period, the number of small businesses grew 3% to 955,861 after an extraordinary period of growth during the 2021 financial year, jumping 15% to 931,791.

“Despite the difficult economic conditions resulting from a global pandemic and a contraction in economic activity during the 2021 and 2022 financial years, the number of SMEs operating in Australia has grown,” ABA Chief Executive Officer, Anna Bligh said.

“The rate of growth across all business sizes during the 2022 financial year was larger than the growth experienced in the years leading up to pandemic,” she said.

The Report, launched today at the Small Business Roundtable, provides a snapshot of the current economic position of the small business sector in Australia.

Ms Bligh said that The Report showed the experience of SMEs has been mixed during the past year, as they navigate an economic landscape complicated by inflation, rising interest rates and low unemployment.

However, she said business and small business confidence has not mirrored the subdued consumer confidence.

“While the growth of total small business lending remains flat, data received from ABA member banks shows that the average value of loans made to small and medium businesses has been increasing,” Ms Bligh said.

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Key highlights of the SME Report include:

• Appetite for finance – The appetite for finance has returned to the longer term average amongst small businesses but is growing amongst medium businesses.
  • The total value of outstanding finance to small businesses in August 2022 was just over $142 billion, returning to the medium-term average, after having dropped to under $138 billion in the second quarter of 2022.
  • Lending to medium businesses has increased by 16 per cent, from $281 billion in August 2019 to $326 billion in August 2022.
• Cashflow – Of those SMEs that intend to take out additional finance, the main reason is for cashflow or working capital but fewer businesses are reporting a requirement to borrow for cashflow purposes. This suggests that cashflow problems are less of a concern than they were a year ago. 

The Report will be shared with governments and relevant stakeholders as the banking industry continues to deliver innovative products and services to customers.

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