In February 2018, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), in partnership with Fintech Australia and, published a study – “Fintech lending to Small and Medium sized enterprises (SMEs)”. Alternative Finance business lenders in Australia did a survey carried out by the ASBFEO.

High-Level Statistics of Fintech in Australia

  • 579 Fintech start-ups in Australia today
  • More than 10,000 people are employed in this sector
  • Australian Fintech companies received $656 million in investments in 2016


1.    Types of Alternative Finance products offered by Fintech’s lending to SMEs

Loans offered by Fintech firms / Alternative Finance providers help SMEs who often do not have fixed assets in which they can use to secure a loan. Fintech firms offer many different types of Alternative finance products for SMEs. This allows SMEs to be able to secure financing.

The most commonly offered loan products by SMEs are:

  • 74% – Fixed term unsecured loan
  • 47% – Secured business loan
  • 42% – Line of credit/revolving line of credit
  • 32% – Invoice finance/ debtor finance/ factoring



1.1.  Loan terms and amount of loans provided to SMEs by participants

Further research was done to find out what are the typical loan terms offered by Fintech firms and the amount of loans provided to SMEs by Fintech firms.



With regards to the loan amount that Fintech firm’s give to SMEs,

  • 58% of Fintech firms indicated that majority of the loans are below $100,000
  • 32% of Fintech firms indicated they prefer to offer a loan amount of between $50,000 and $100,000 to SMEs


With regards to the loan term that Fintech firm’s offer on their loans to SMEs,

  • 60% of Fintech firms indicated that majority of their lending has loan terms of 12 months or less
  • 42% of Fintech firms indicated that they prefer to offer loans of loan terms between 7-12 months to SMEs


The research conducted pointed out that Fintech firms engage in financing across a wide range of amounts and terms. Therefore, a customer seeking a loan which is not within the lenders preferred loan term and amount can still secure a financing solution from the lender.



 2. The typical use of funds by SMEs

The research was done to find out how SME’s utilise the funds they received from Fintech Lenders. SME’s cited the main reasons in which they normally use the funds they borrowed from Fintech firms. Majority of SMEs use the funds for business expansion, managing their cash flow and paying for inventory.



3.    Why do customers choose to borrow from Fintech business lenders?

The survey participants were also asked to describe how their product experience was when obtaining financing from Fintech firms as compared to obtaining financing from a bank. Most respondents highlighted 3 main areas in which SMEs prefer when obtaining financing from a Fintech firm as compared to a bank.

  1. Much simpler process in applying for financing from a Fintech firm as compared to applying for financing with a bank.
  2. Fintech firm’s make faster decisions as compared to traditional financiers
  3. Competitive pricing compared to traditional financiers


Fintech firms meet SMEs expectations by allowing them to easily apply for financing online and obtain financing quickly due to their rapid credit decisions. Furthermore, the personal service provided to each of their clients causes SMEs to opt for financing from Fintech firms instead.




4.    Fintech Credit Assessment Process

Fintech firms use different types and sources of data to ensure efficiency and precision in evaluating the credit worthiness of the SMEs who have applied for financing. The new way of credit assessment also allows Fintech firms to be able to underwrite financing applications of SMEs whose risk could not be evaluated by traditional banks.

Fintech Firms uses these indicators to evaluate SMEs:

  • Cash flow amount and stability
  • Liquidity indicators
  • Income diversification
  • Balance sheet leverage

These are the information Fintech firms look at when conducting their credit analysis of the SMEs who are applying for financing with them.



Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Fintech lending to small and medium-sized enterprises Improving transparency and disclosure, Feb 2018, link [Accessed 13 Jul. 2018].