Two out of three small businesses shocked by rising electricity bills
Sqale Finance is different from your average broker and, just like OnDeck, prides itself on disrupting the winding road of finance for SMEs in Australia.
Led by an experienced business owner and entrepreneur, Yuan Chong, Sqale also has its finger squarely on the pulse of the challenges facing Australian small businesses today.
“Given that I have been through the trials and tribulations of owning many businesses, from restaurants and cafes to technology startups, I know how to apply commercial lending to small business needs,” Yuan said.
Yuan Chong, Sqale Finance Owner
Regarding the trials and tribulations small businesses face right now, research from OnDeck has found that two-thirds (66%) of small businesses nationally say rising electricity prices are impacting them.
For one in four (25%) small businesses, soaring electricity bills have a more significant impact on profitability than rising fuel costs and the increased price of trading stock. Small businesses are unlikely to enjoy a reprieve from rising electricity costs any time soon, with Federal Treasury pointing to a 30% jump in electricity costs in 2023[i].
This comes when many Australians are about to hit a “mortgage cliff” – the end of a very low fixed-rate home loan and the ensuing transition to a far higher revert rate. The Reserve Bank of Australia (RBA) says 880,000 fixed-rate home loans, worth around $350 billion, will reach the end of a super-low fixed rate in 2023[ii]. The central bank has observed, “These (fixed rate) borrowers will face very significant increases in loan repayments.”[iii]
Yuan Chong says, “Rising electricity and fuel prices, and higher mortgage costs may be driving some clients to leverage debt within their business, but supply chain snags are significant issues for small businesses, along with a shortage of workers.
Yuan also maintains that supply chain snags are also occupying the attention of small businesses. “Logistics is a big issue for small businesses, especially those importing products from China. Currently, it’s challenging for retail businesses and independent grocery stores to get a handle on what’s coming out of various countries including China and what’s not.”
“Those in retail need to have enough money to buy in bulk to get the discounts to cover higher prices, which is where non-bank lending helps.”
Focusing on commercial lending
According to Yuan Chong at Sqale, its experienced specialist brokers have worked with lenders in the past and know the ins and outs of getting business loan approved for their clients.
“I am an entrepreneur with a passion for sales and service. After six years in finance and over 12 years as a business owner, I saw a gap in the market for collaborating with referring partners such as mortgage brokers and accountants, as well as taking new small business leads directly.
Yuan previously worked with one of Australia’s top fintech lenders and launched Sqale as a bespoke service supporting a network of brokers in their diversification to commercial lending. He added, “We saw an opportunity to support mortgage brokers unfamiliar with small business lending.
“We only do business loans, including asset finance, and we take an advisory approach when working with our clients.”
Broker disruptor gives OnDeck the thumbs up.
Yuan says a commercial lending specialist such as OnDeck works perfectly for brokers on several levels. “A broker might be working on securing a loan for a small business to secure a commercial property.
“In a situation where the valuation on the property comes up short, and there is a gap, and they need bridging finance fast, where else can they go?
“Or it might be where a business is acquiring another, and they have taken money out of the business to make this move. This might the business with a very thin cashflow buffer, and an online lender such as OnDeck can come in and help.”
Yuan, who says he loves working with OnDeck, added, “A huge advantage with OnDeck is that they take a holistic approach when looking at a small business and then find the best way to assist them.
“As a broker, this means that when I send a deal to OnDeck, they will analyse a business’s cash flow and ask the right questions to increase the chances for successful approval.
“OnDeck has a team of very experienced business development managers that provide a seamless experience for brokers – they simply know the right questions to ask to ensure we get it right the first time.”
[i] https://treasury.gov.au/speech/opening-statement-economics-legislation-committee-4
[ii] https://www.rba.gov.au/speeches/2023/sp-gov-2023-02-17.html
[iii] https://www.rba.gov.au/speeches/2023/sp-gov-2023-02-17.html
Prepared by OnDeck Capital Australia Pty Ltd ABN 28 603 753 215 (“OnDeck”) for general information purposes only. Content may belong to or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information. Information current as at March 2023. You should not rely upon the material or information as a basis for making any business, financial or any other decisions. Loans issued in Australia are subject to the terms of a loan agreement issued by OnDeck. Loans are subject to lender approval. OnDeck® is a Registered Trademark. All rights reserved.
