• 23/06/2024

Three-quarters of SMEs believe bank appetite has decreased

Annie Kane | The Adviser | 7 May 2019


Seventy-four per cent of small business owners believe that bank appetite for SME lending has decreased this financial year, while 30 per cent believe that access to capital is the biggest impediment to growth this year.

According to a recent survey conducted by specialist business lender GetCapital between 3 to 15 April, 74 per cent of the 216 small business owner respondents said that they believed the banks’ appetite for lending to small business has decreased this financial year (while a fifth of businesses thought that it had stayed the same).

Indeed, while a third of businesses said that “the general economy” was the biggest impediment to growth in 2019-20, “access to capital” was in close second – with 30 per cent of SMEs stating it was the biggest barrier to growth. This was followed by “government regulation and taxes” (17 per cent) and “hiring staff” (12 per cent).

Despite this, 62 per cent of SMEs said they were expecting to be financially better off next year. This marks a vast improvement on attitudes to current performance, as just 23 per cent said they believed their business was financially better off than it was last year.

The survey was undertaken as the Coalition government released its budget for 2019-20, and SMEs were asked about their thoughts on the budget and its impact on their businesses.

While 45 per cent said they believed the budget would be effective in stimulating small business growth, nearly half (49 per cent) of businesses said that they would be likely to take advantage of the extension of the instant asset write-off (which has increased from $25,000 to $30,000 and expanded to medium-sized businesses) in 2019-20.

In general, 61 per cent of SMEs surveyed believed that the political policies of the Coalition government would have a positive impact on their businesses, compared to a fifth (20 per cent) who believe Labor’s policies would.

GetCapital CEO Jamie Osborn said that the responses to the survey were “particularly revealing” given that the federal election is set for next week (18 May).

He noted that access to finance continues to be one of the biggest impediments to small business growth but added that while “customers, brokers and the market generally [believe] that bank funding for small business continues to tighten,” brokers were well placed to help SMEs access finance from other lenders.

Mr Osborn’s comments echo those made by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), Kate Carnell, recently, who lamented that banks are lending less money to small businesses, urging brokers to enter into this space to ensure that the “engine room of the economy” can continue to turn.

Mr Osborn added, however, that it was a positive indicator that business owners were optimistic for the year ahead.

He continued: “The asset write-off policy, combined with the reduction in tax rate, provides strong incentives for profitable, tax-paying small and medium business to invest further in their businesses.”

“Stimulating small business investment in this way is a very effective way of boosting employment growth, so there are likely to be positive flow-on effects to the general economy from these policies”.

SME finance in focus

Improving access to finance for small and medium-sized enterprises has been a point of focus for the government this year, with the Coalition government announcing that, if re-elected, it would establish an Australian Business Growth Fund to facilitate up to $1 billion in capital investment to the SME sector via a funding arrangement between the federal government and the banking and superannuation sectors.

Prime Minister Scott Morrison has pledged $100 million to the fund, with the Commonwealth Bank, NAB and HSBC Bank matching his commitment.

Businesses with an annual turnover of between $2 million and $50 million will be eligible for the scheme and would retain a minority shareholding of up to 40 per cent.

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