02 October 2019
Lending to small business crucial to economic growth: Ombudsman
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%, 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,” Ms Carnell says.
“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.
“Dr Lowe says 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.
“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.
“The most recent SME Growth Index revealed one in five SMEs are experiencing cash flow problems due to business loans being rejected.
“Even the Australian Banking Association has acknowledged that small business loan applications have fallen by 33% 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 of significant benefit to the Australian economy.”