SME’s need support from lenders to grow: RBA

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SME’s need support from lenders to grow: RBA

Australian SME’s need support. The ‘pendulum may have swung a bit too far’. The tight lending standards currently imposed on small businesses are crippling. 

Since the RBA cutthe official cash rate to a new record low of 0.75% a few months ago, most of the attention has been on whether the banks would pass the full 25 basis point cut to home loan customers (spoiler: the big four banks only passed on 0.13-0.15%). This month we have seen rates left on hold. We’ll wait to see what, if any, action the banks will take.

As such, several pointed remarks made by RBA Governor Philip Lowe in regards to lenders’ “tight” lending standards imposed on SMEs have flown under the radar.

“In some areas the pendulum may have swung a bit too far,” Dr Lowe said at the Reserve Bank Board Dinner last month.

“It is important that our financial institutions support small businesses in particular.” Lenders should not be scared of making a loan that goes bad. They must provide the credit that the economy needs.

“We will all be better off if businesses have the confidence to expand, invest, innovate and hire people.”

SME’s need support, We hear you!

At IBN Direct we understand that SME’s need support. We take the time to assess your proposal and take into account your exit strategy when we place your loan.

Our common sense approach sees developments funded, SME’s able to survive the peaks and troughs that come with seasonal cash flow, and gives business owner’s the quick turnaround they need in order to purchase the commercial premises that’s just right for their business needs.

Many SMEs struggling

Dr Lowe’s comments came just weeks after a number of reports highlighted many small businesses were struggling. Financing complications seem to be the main cause for concern.

One report, by market analysis firm East & Partners on behalf of Scottish Pacific, showed that more than one-in-five business owners said that being rejected from a lending product was the main reason for their cash flow issues.

Another report, by the Australian Banking Association (ABA), showed that while 9 million Australians have dreamed of starting their own business, 60% are held back from their dreams due to ‘access to money’.

‘RBA Governor’s advice should be heeded’

The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has urged lenders to heed Dr Lowe’s advice.

“The overwhelming feedback to my office from the small business community is that a lack of access to funding is their biggest barrier to growth,” Ms Carnell said.

“If our financial institutions change the way they do business with SMEs, it might just give small businesses the confidence they need to grow, which would be of significant benefit to the Australian economy.

“It’s time we all sit up and listen to the RBA Governor.” Our SME’s need support.

What next?

Sitting around waiting for everyone else to listen to the RBA Governor isn’t the most proactive business strategy. If you’re in need of equipment or asset finance for your business, take action!

So if you’re an SME owner looking to fund your business’s growth, then get in touch.

If you have a proposal and you just want to get started, Start Here!

We’ve got a number of funders on our panel. Let’s run through some options to help you grow your business.

 

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