Stripe enters Australian SMB lending as Reserve Bank data shows persistent small business financing gaps.
What’s happening: Stripe announced it will launch Stripe Capital in Australia, providing eligible small and medium businesses access to fast, flexible business financing through the Stripe platform. Over 92% of Australian business leaders surveyed expect major challenges over the next 12 months, with rising costs the primary concern.
Why this matters: Around half of SMEs had faced difficulties when trying to obtain funding, with the most common challenge being the time taken to process applications according to Reserve Bank research. Stripe’s data-driven approach using payment history could reshape SMB financing for businesses already embracing AI and digital technologies.
Australian small businesses are facing a challenging period ahead. Over nine in ten (92%) business leaders surveyed expect major challenges for their business over the next 12 months, citing managing rising costs (51%), navigating economic uncertainty (38%) and retaining customers (28%) as the biggest issues they’ll face. Despite these pressures, confidence remains high with 85% feeling positive about their business’s overall performance, competitiveness and ability to acquire new customers in the year ahead.
Fast funding arrives
Stripe Capital uses Stripe data, such as a company’s payments processing activity with Stripe, to provide pre-approved offers for financing. The process is designed for speed: once a business sees its offer approved, funds are disbursed into their accounts in just one to two business days.
“SMBs are the backbone of the Australian economy, but the cost of doing business has risen sharply and around half report difficulty securing funding,” said Karl Durrance, managing director, Australia and New Zealand at Stripe. “Stripe Capital is designed to tackle their challenges head-on. We’re giving businesses fast access to financing with a clear, flat fee and flexible repayment terms that adjust to their sales.”
The financing structure differs from traditional lending. Repayments are tied to business earnings, with no compounding interest, late fees, or early repayment penalties. Stripe Capital is expected to be available to Australian businesses in the coming months.
Tech adoption surges
Despite economic headwinds, Australian businesses are doubling down on technology. More than four in five (85%) decision makers surveyed say they are very or somewhat confident in their ability to embrace and implement new technologies over the next 12 months, with nearly half (44%) feeling very confident.
The announcement was made at Stripe Tour Sydney, where the company revealed it has over one million users, from global businesses and solopreneurs, in Australia and New Zealand running on Stripe, with tens of thousands joining each month.
AI leads innovation
Artificial intelligence is no longer experimental for Australian businesses. Seven in ten (70%) decision makers surveyed say their organisation uses AI, with the most common applications including customer service (39%), fraud detection (32%), sales and marketing (31%), and product development (30%).
Looking ahead, nearly a quarter (23%) of decision makers surveyed predict that 11–20% of their sales will come through AI channels such as large language models like ChatGPT in five years, while a further 14% anticipate more than one-fifth of their sales will be AI-driven.
The next frontier, agentic AI, is gaining traction across the SME sector. More than half (53%) of decision makers surveyed overall say they are familiar with Agentic AI, rising sharply to 84% among large businesses surveyed. Adoption is set to accelerate: three-quarters (72%) of decision makers surveyed say they are already implementing or plan to implement Agentic AI within the next 12 months.
This broader trend is reflected in payment platforms, with various providers including Stripe reporting strong uptake of AI-enabled tools among Australian users.
Global expansion accelerates
The international ambitions of Australian businesses are reflected in their payment patterns. Cross-border digital payments are growing significantly, with various platforms reporting strong year-on-year growth as more businesses sell internationally.
Stablecoins are emerging as a key facilitator of this growth across the sector. More than half (53%) of decision makers surveyed say they are already using or planning to use stablecoins, with adoption set to accelerate further as 18% expect to start within the next 12 months and another 12% plan to do so within one to two years.
The trend represents a broader shift towards programmable finance solutions that can facilitate multiple markets through single integrations, with various fintech providers positioning themselves to capture this growing demand.
“These technologies aren’t just Silicon Valley topics anymore, they’re reshaping the fundamentals of internet commerce,” said Durrance. “We’re focused on making this future accessible for Australian businesses.”
The context reveals significant gaps in traditional business financing. A recent survey of SMEs found that around half had faced difficulties when trying to obtain funding, with the most common challenge being the time taken to process applications according to Reserve Bank of Australia research.
Before Taking Fintech Financing: 3 Key Checks for SMEs
1. Understand the repayment structure: Unlike traditional loans with fixed monthly payments, many fintech lenders tie repayments to your revenue. Calculate how this affects your cash flow during slower periods.
2. Review data privacy policies: Fintech lenders often use your transaction data to make funding decisions. Understand what data is collected, how it’s used, and whether it’s shared with third parties.
3. Compare total costs: While fintech options may have no interest rates, factor in flat fees, processing costs, and any revenue percentages. Compare the total cost against traditional bank lending options.
Related: Budget 2024: Budget must address tech transition for SMEs | Top threats to Australian SMEs in 2024
