Its report, Digital Disruption Dairies, which surveyed thousands of small businesses globally about how they access finance, found that 43 per cent of all small businesses rely on family and friends to financially support them, especially in times of crisis.
The data also revealed that 28 per cent of SMEs used their own personal finances to support their business, and only 30 per cent accessed finance from credit unions or banks.
However, although SMEs have suffered due to COVID and lockdowns, the report also found that these difficulties inspired what it now terms COVIDpreneurs – a key consumer group that is emerging globally. These are consumers who set up their own business since the pandemic (24 per cent) with that figure now jumping to 54 per cent who said they are now more likely to set up their own business now.
However, the pandemic isn’t just responsible for creating more SMEs, it’s changing their expectations of lenders as access to funding remains a constant roadblock, the report found.
Of the businesses that took part in the survey 67 per cent said they were unable to access financing from a bank. Of those 30 per cent said the reason stated was the bank said they had insufficient capital, 28 per cent said the administration process of accessing funds was too confusing and time-consuming, and another 27 per cent said they were refused on the basis of lack of cash flow.
The report highlighted the need for traditional banks to look at changing the way in which they support SMEs.
“New digitally native SME lenders can capitalise on these growing demands from this emerging entrepreneurial tribe,” the report said.
“Covidpreneurs look for favourable business services including tailored SME support and lending packages. The banks that understand these two consumer groups and authentically meet their needs will have the upper hand for years to come.”
