The Australian Retailers Association (ARA) has supported Minister Emerson’s view yesterday that Australia’s big banks aren’t doing enough for small business.
ARA executive director Richard Evans said the Australian Bankers Association (ABA) – who has stated there is a reduced demand for lending to small business – are not close enough to the real small business market doing it tough right now.
"Fact sheets recently developed by the ABA may make big banks feel like they’ve addressed the issue of small business access to credit, but the fact remains banks have no clue about the SME market.
"Minister Emerson has clearly reminded banks of their responsibility to provide adequate credit flows to the small business sector and to pass on to small business Reserve Bank interest rate cuts to the maximum extent possible. According to ARA research, banks are failing to live up to this responsibility.
A snap poll of SME retailers in March revealed, in the last three months alone, 25 per cent of SME retailers have attempted to renegotiate lending facilities with their banks. Of these, over 45 per cent are having difficulty renegotiating loans and lines of credit.
"Small business owners commonly use their personal credit cards to fund their day-to-day operations such as cash flow and small capital equipment purchases. However, only four per cent of SME retailers have had interest rate cuts passed onto credit cards,” said Evans.
"A further 70 per cent of SME retailers with overdraft facilities haven’t been passed on interest rate reductions. And over 50 per cent of SME retailers with business loans are still waiting to feel the effects of interest rate cuts.
Evans said small business owners, including mum and dad retailers, having difficulty accessing credit still borrow. They take out personal loans and they access second mortgages for their businesses to survive.
"Australia’s big banks need to generate new low-rate credit cards and other lending products for small business and they need to begin to collect data about how small business operates and access funds. Banks are focused on the big end of town to the detriment of retail sector.
"For small retailers, the fact remains it is a difficult and costly processes to borrow from a banks who are lured by the obvious benefit of other lucrative markets and don’t understand the small business sector," said Evans.