In what could be a further blow to some of the beleaguered major banks, many Australian small and medium enterprises (SMEs) are no longer considering banks as their choice of funding, with many admitting that they ‘don’t bother’ because they do not expect to get loans.

This is leaving SMEs chasing other sources of lending potential through many up-and-coming fintechs, which look to position themselves as a viable alternative to the major lenders.

One startup known as Smarter Drafter, which has become a favorite of legal firms looking for a speedier way to sign legal documents and keep them safe, did not see banks as a suitable funding option in the current climate.

Its founder, Adam Long, said: ‘We never looked at banks because we didn’t think they would want to.’ This could indicate the little faith that SMEs have that banks are going to loan them the kind of capital necessary to get off the ground and operate. Long sought backing from family and friends, but many other SME founders do not have that option, so these bright prospects immediately fall by the wayside and have to explore other avenues for starting their businesses.

Long set up a second company called Conscious Step, which offers eco-friendly stocks. He opted to finance it via crowdfunding despite now having the financial acumen and proof of successfully running a business.

Given that Long’s two companies now have a combined turnover of more than $1m annually, he lamented the fact that he could have gotten ahead much quicker with a $100,000 loan from a major lender.

A survey published today showed that just under a third of all Australian SMEs are struggling to get the amount of funding that they need. Confidence in obtaining funding is now at the lowest level since 2013.

Intriguingly, the survey also suggested that not all sectors are equal, with retail and manufacturing industries finding it the hardest to access funds and tech solutions tending to fare among the most fortunate.

Sensis, which published the figures, believes that a major reason for these results is that the major banks are currently under fire from the Royal Commission. Its CEO, John Allan, said that ‘these results support fears expressed by small to medium business owners about inability to access finance.’

This has led to the Australian government looking into ways to revive the SME economy, such as implementing a $2bn investment plan that it released earlier in November.

The government has made it clear that more needs done to tempt potential business owners into starting companies with the confidence that they need to access capital funding. There also needs to be a drive to increase investor confidence in certain areas, as plenty of disruptive tech companies are making waves around the world. For Australia to miss out on any of this development could be a big blow to the country’s economy.

Treasurer Josh Frydenberg said that he agrees with these proposals, adding that ‘there are few alternative funding routes’ available. More work is necessary to open new avenues to help SMEs thrive in Australia.