Moneytech finds opportunities in tight banks and credit-hungry SMBs

Despite reports that demand for credit is low amongst SMBs, tight post-GFC banks has lead to a substantial increase in demand for alternative financing options.

A report at Dynamic Business has claimed that SMEs are reluctant to take on credit in 2010, citing Veda Advantage’s Business Credit Demand Index in claiming a 5.7 per cent drop in demand in the July to September period over the same quarter in 2009.

However, Moneytech managing director, Hugh Evans, claimed this was more a reflection on a credit-tight banking sector than a lack of demand for credit.

Moneytech has seen a threefold increase in business over what it had undertaken in the previous year, Evans claimed.

The company acquired new distributor clients in recent years, including the significant cap in Ingram Micro late last year, which will have added significant numbers of new customers to the database for the financial provider. However, Evans said the credit demand growth had been seen equally in other verticals it services.

Moneytech also has clients in the coffee, clothing, jewellery, health and pharmaceuticals verticals, in addition to its traditional IT home ground.

“Banks have made it much more difficult and put the prices up of credit,” Evans said. “They’ve also tightened the requirements of who they will give that credit to.

“SMEs still need cash flow funding. What happened through the GFC is that people sat on their cash, so the flows stopped. Once that happened, people need to borrow to kick start the cash flows again.”

As a result, Moneytech – and its rivals – are finding a wealth of opportunity in SMBs looking for alternative storage solutions.

However, Evans did say there were some circumstances where SMEs – especially those on the import side of the industry – would require less cash.

“In the last six week there’s been a 10-15 per cent increase in the value of the dollar,” he said. “Now we’re approaching parity it’s cheaper to import goods.

“That said, they also need to sell more, and although I’m not sure they’re passing on the margin to consumers just yet, they still need to find the money for the additional product.”

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