Credit: Close-up Of A Businessperson's Hand Filling Small Business Loan Application Form
The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell agrees with RBA Governor Philip Lowe’s view that small business needs support from our financial institutions.
“In cutting the official cash rate to an all-time low of 0.75 per cent, RBA Governor Philip Lowe made several pertinent observations about the credit squeeze affecting the Australian small-business sector and how that’s effecting the economy more broadly,” Carnell stated. “Most would agree with Dr Lowe’s comment that we will all be better off if businesses have the confidence to expand, invest, innovate and hire people.”
Lowe has earlier stated that lending standards have strengthened, but the ‘pendulum may have swung a bit too far’ in some areas.
“Vitally, Dr Lowe made it clear that our financial institutions should support small businesses, stating ‘lenders should not be so scared of making a loan that goes bad that they don’t provide the credit the economy needs’. The RBA Governor’s advice should be heeded,” Carnell pointed
The ASBFEO noted that the overwhelming feedback from the small business community is that a lack of access to funding is their biggest barrier to growth, especially in terms of lending.
The most recent SME Growth Index revealed one in five SMEs are experiencing cashflow problems due to business loans being rejected. The Australian Banking Association also acknowledged that small business loan applications have fallen by 33 per cent since 2014.
“It’s time we all sit up and listen to the RBA Governor. 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 if significant benefit the Australian economy,” Carnell said.