The recently-released September Quarter 2018 Sensis Business Index has revealed SMEs’ ability to access finance is at a five-year low.
The report, which tracks small and medium business activity, expectations and confidence, found that 31 per cent of SMEs struggled to access finance within the September quarter – dropping a massive 17 points from the results seen in the same quarter of 2017 to a net balance of -17, the lowest recorded since the 2013 June Quarter report.
Sensis Chief Executive Officer, John Allan said, “In the midst of the Banking Royal Commission, these results support fears expressed by small and medium business owners about inability to access finance”.
SMEs in the finance and insurance, manufacturing and retail sectors found it most difficult to access finance, reporting net balances of -52, -28 and -26 respectively. All states and territories except Tasmania (+7) recorded a negative balance with Victorians struggling the most (-23).
Despite confidence falling significantly across the country (except in Tasmania) with a fall of seven points in confidence from last quarter, SMEs remained positive with the national average sitting at a healthy +42 with 60 per cent feeling confident in their business prospects.
The main reasons provided for feeling confident included healthy/growing sales and specific business strengths. While established businesses were the most confident, many businesses highlighted cost pressures as impacting confidence.
Allan believes that the drop-in confidence may indicate growing concerns.
“While we see another positive balance when it comes to confidence, the jump in SME confidence we saw in the June quarter has dissipated. With the issues around accessing finance featuring heavily in the Royal Banking Commission, it will be interesting to see if this continues to fall,” he said.
The September Quarter study, conducted just a few weeks after the August political spill that saw Scott Morrison take over from Malcolm Turnbull as Prime Minister, also found that SMEs remained confident in the Federal Government – with the net balance remaining +3.
Of those with a favourable view (23 per cent), offering tax cuts, incentives, subsidies and grants as well as benefits such as the $20,000 depreciation write off were the top reasons for their positivity, while those with a negative opinion (20 per cent) were likely to reference too much bureaucracy, high taxation and focus on big business as a driver of their concerns. A further 57 per cent claimed the Federal Government has no impact for their business.
“Despite Australia having five Prime Ministers in just over five years, the majority of small-medium businesses seem to have become resilient to leadership changes, with more than half those surveyed indicating it making no difference to their confidence,” Allan said.
