Why the land of oligopolies is costing Australian SMEs $ 291 billion



SYDNEY, 22 November 2021 / PRNewswire / – Global SME Lending Fintech Tradeplus24 believes that a well-established lack of competition and predatory practices in the lending industry have left Australian SMEs underfunded to the tune of $ 291 billion by invoice financing alone, compared to British SMEs.

Tradeplus24 calculations compared invoice financing volumes as a percentage of GDP in Australia (3.9% or AU $ 75 billion) against the United Kingdom (19% or AU $ 366 billion) to reach the $ 291 billion figure.

The experience of Tradeplus24 operating across the UK, Switzerland, The Netherlands, and Australia enabled her to identify several predatory practices endemic to the Australian market which she believes are causing this problem, disproportionately harming Australian SMEs compared to other markets.

These practices include price discrimination against SMEs that do not meet the bank’s lending criteria, checking the SME’s bank account, preventing the SME from incurring other sources of debt, the application of voluntarily complex tariff structures and the foreclosure of SMEs in contracts of a maximum duration of 2 years, despite the invoices being procured with an average deadline of around 40 days.

Tradeplus24 also points out that despite an increasing number of Australian SMEs now transacting globally, many Australian SME lenders can only support domestic invoices, making their offer unusable for a growing number of SMEs.

Tradeplus24 believes that to solve this problem Australian SME lending is in desperate need of better regulation or for the industry to self-regulate with a code of conduct, based on much more progressive practices commonly seen in the UK and UK. -United. Europe.

Adam lane, Managing Director of Tradeplus24 Australia, says: “SMEs of Australia are very similar to UK or Europe. So why Australia so far behind these markets in terms of credit to SMEs?

“We have noticed that SMEs are much less likely to understand the benefits of leveraging receivables, compared to those we work with in Europe. This creates low demand for the products, which are perceived as expensive and not user friendly. It also becomes a self-sustaining cycle.

“Low demand contributes to a poor supply of quality SME lending products and a deep-rooted lack of competition. Lenders can therefore set their own terms, including forcing SMEs to relinquish control over their bank accounts and collateral such as personal property, charging opaque and expensive fees, and enforcing restrictive foreclosure contracts.

“If we want Australian SMEs to grow and compete in global markets, we urgently need to adopt stricter regulations or a code of conduct based on superior European practices. This could help put an end to predatory, unfair and anti-competitive behavior.

Ben james, Founder and CEO of Tradeplus24, said: “By carrying out our research on the countries that would be priority markets for Tradeplus24’s global activities, Australia stood out because of the size of the SME sector and the astronomical opportunity to disrupt an oligopoly dominated by incumbents.

“We believed that we could gain significant market share simply by implementing an invisible, simple, fair and more competitive invoice financing product, backed by sophisticated technology and informed by our vast global experience. “

The oecd recently criticized The insistence of Australian banks on using residential property as collateral for small business loans, when other options like bills can be far superior.

Tradeplus24 Australia (www.tradeplus24.com.au) is an alternative lending fintech company that provides Australian SMEs with a unique asset-backed line of credit solution for loan amounts between $ 200,000 To $ 3 million. It was launched in 2019 in Australia address a 80 billion dollars under-provision of credit to Australian businesses, allowing SMEs to manage their cash flow and enable rapid growth.

Tradeplus24 has already generated proven results in European markets, notably by securing the support of high profile investors from Credit Suisse Entrepreneur Capital, SIX Group and Berliner Volksbank.

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