92 per cent of small- and medium-sized enterprises globally are open to switching lenders, with digital services becoming increasingly essential for finance-starved business owners.
According to a new survey by cloud banking platform Mambu, more than two thirds (67 per cent) of SMEs have been unable to secure sufficient, or any, funding on at least one or more occasions.
As a result, 43 per cent of SMEs have had to rely on friends and family for loans, with this figure rising to 47 per cent among businesses launched since the start of the Covid-19 pandemic.
Of the SMEs unable to secure sufficient funding, 34 per cent told Mambu that they had experienced cash flow issues, while 33 per cent were unable to launch new products or services and 30 per cent were unable to hire effectively.
Among larger SMEs with between 101 and 250 employees, 40 per cent said that being unable to access funding has negatively impacted their ability to hire, while 36 per cent said a lack of funding had meant that they could not effectively scale up.
Meanwhile, digital lending solutions have become more popular since the pandemic. 66 per cent of SMEs that launched after March 2020 said that digital services are an important lending consideration, versus just 53 per cent of businesses that launched before this date.
“SMEs are the lifeblood of the global economy and responsible for driving growth, job creation and the post-pandemic recovery,” said Eugene Danilkis, chief executive at Mambu.
Read more: SMEs start looking for larger loans
“But they are facing big challenges. Access to external funding has become difficult during the pandemic amid record demand for financing and increased friction in the lending process. It’s no surprise SMEs are ready to jump ship for better, more accessible services.
“If lenders want to stand out, they must transform and modernise their financial experiences to ensure SME success; this includes faster onboarding and loan decisions, harnessing the power of the cloud and offering mobile and digital-first products.”
When it comes to improving the loan application process, the majority of SMEs reported interest in faster loan decision processing (79 per cent), more flexible loan conditions (78 per cent), tailored offers and services (76 per cent), and low or no collateral requirements (75 per cent).