March 12, 2010The
Australian Chamber of Commerce and Industry (ACCI) remains concerned businesses, especially SMEs, are continuing to face difficulties accessing finance, with many of those which are successful, subject to the application of unreasonable margins.
As means of providing more focus on the problems associated with the provision of small business finance, ACCI is again calling on the Australian Government to ask the Productivity Commission to examine issues including the state of competition in the market, changes in the cost and availability of finance and relevant international comparisons.
Recent ACCI small business survey results confirm raising loans from financial institutions, and associated charges, remain a constraint on overall business investment.
ACCI Director of Economics and Industry Policy, Greg Evans, says he acknowledges in the aftermath of the global financial crisis overall funding costs have risen.
“However while pricing is clearly very important, access to finance for SMEs remains very difficult with the imposition of much stricter credit criteria applying throughout the banking sector,” Evans says.
“Business is not suggesting that marginal lending should somehow be artificially propped up, however our analysis suggests even sound credit proposals with appropriate security arrangements are often declined as they fall outside arbitrary credit controls,” he says.
In the area of business lending the diversity of funding sources has narrowed markedly, with a consequent diminishing of competition.
“The exiting of some foreign banks, the diminished role of non-bank lenders (especially in the area of asset financing) and the relative market position of smaller and regional banks have reduced competitive choices for business,” Evans says.
“ACCI believes sooner rather than later Australia’s banks need to get back to the business of lending to the small to middle ranking enterprises and they need to re-skill their workforces so they understand risk assessment and are able to make sound judgements about the capacity of a borrower to service and repay a loan,” he says.
