The Growth of Small Business Funding

Growth of small business funding

As specialists in small business funding, we’ve identified key trends in the industry this past year, such as; application data, the industry itself, industry growth and business recovery post-pandemic.

Change in Application Data

There has been a positive shift in application data for alternative financing. Credit scores on average have increased, which indicates a healthy financial recovery for businesses post-pandemic. We have also seen an increase in the number of established businesses opting for non-traditional means of business funding, in order to capitalize on their growth trajectories. 

“The overall increase in credit score may come as a surprise, as credit scores are expected to worsen following a global pandemic. However, it shows a shift in the markets’ approach to business funding. Strong, solvent businesses that would traditionally draw on additional lines of credit with their banks, are opting to explore other financing routes in a post-pandemic climate.” – Jonti Strimling CFO and Co Founder of Growise Capital

Businesses are seeking out fast and easy financing options to assist with growth and cash flow requirements, and they’re seeking it out from reputable funding specialists who know how to meet these needs. At GroWise Capital, we assess the sustainability of a client’s cash flow when deciding on applications. This allows us to provide quick and flexible funding, designed around their particular needs.

We have designed and curated a different approach to risk mitigation, mainly due to the thorough understanding of the cashflow requirements of small and medium businesses. A deep understanding of our clients’ needs allows us to make quick decisions and tailor our funding and repayments to each client’s specific funding circumstances.

Change in Industries

In the past, the demand for alternative forms of business funding mainly came from the retail sector. However, over the past 6 months, there has been a 20% increase in applications from a wider range of sectors such as construction, logistics and fuel supply, retail supply verticals and more.

More industries are now realising the benefits of partnering with alternative business funders, which reflects how the business funding landscape is changing and adapting. Restaurants, grocery stores and retail merchants still remain the largest sectors  benefiting from alternative funding as traditional forms of funding are no longer meeting their needs for fast, flexible funding.

Post-Covid Recovery and Changes in Default Rates

In the recent Momentum-Unisa Consumer Financial Vulnerability Index (CFVI), it shows that whilst there was a brief period of recovery in the first quarter, South Africans are still unguarded across expenditure, income, debt servicing and savings in the second and third quarters of this year compared to previous years. This further increases the demand for readily available alternative business funding services.

Also read: When Is Taking A Merchant Cash Advance Right For Your Business?

Despite this vulnerability, impairment rates steadily declined at GroWise across all industries when compared year-on-year. This healthy improvement is a further indication of the steady financial recovery of businesses going into 2023.

As we’ve said before, it’s always of the utmost importance to do extensive research into the best business funding options for you. There are countless reasons to seek alternative business funding, and our goal at GroWise is simple, to get your business funded and growing, fast. Explore our website, get in touch with us and apply here.

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