Access to finance is only a concern to SMEs wanting to grow, and even then, isn't seen as a huge issue, a report released yesterday shows. A study conducted by DBM Financial Service Monitors for the Australian Bankers' Association and the Council of Small Business of Australia has found only 6.6% of small businesses were concerned about their access to finance. This was higher in some industries, particularly mining, where the figure jumped up to 16%, telecommunications services, where it was 11%, and manufacturing, where 9% of those surveyed were worried about their access to finance. Of those who did have concerns, they were worried about not being able to access finance quickly enough to take advantage of new opportunities as they come up. The report was commissioned by the Banks Association after it became concerned that it wasn't adequately understanding the needs of small businesses when it came to financing. Asked what were their most pressing concerns about their businesses, almost half of the 20,000 small businesses surveyed nominated overall economic conditions. This was closely followed by cost management. ABA chief Steven Münchenberg said it was understandable financing wasn't a major issue of concern at the present time. “Business conditions remain below average, although business confidence has recently increased, it’s too early to know yet whether this trend will continue,” he said. “We will be continuing to discuss these issues with COSBOA and look for ways to make it easier for small business to apply and obtain finance while at the same time balancing banks’ obligations to be responsible lenders.” The report also found most small businesses made use of bank financing. Of the estimated two million small businesses in Australia, 49% have a bank lending product other than a credit card. If credit cards are included, 71% of small businesses have a lending product. This story first appeared on SmartCompany.
Small businesses are already disappointed with the major banks, but newly released survey results show the relationship between the big four and SMEs has soured even further. The release of Roy Morgan data regarding bank satisfaction comes as the Small Business Council of Australia (COSBOA) hosts a roundtable in Canberra today, in order to discuss the current problems facing small business access to finance. Roy Morgan data released yesterday shows satisfaction among the big four's business customers in April was just 63.7%, down from 64%, and still well below the satisfaction level of personal customers, which sat at 78.9% in April. The figures show the satisfaction gap between small businesses and banks has continued to widen, with personal customer satisfaction improving by 2.4 percentage points compared to business satisfaction, which has fallen by 0.4 percentage points. Westpac leads the survey, followed by the Commonwealth Bank, NAB and ANZ. The Commonwealth Bank moved up three percentage points over the past year – the only one of the big four to improve – and ANZ has fallen by 4.4 points. The satisfaction differs between different-sized businesses. The micro segment, with turnover less than $1 million a year, was the least satisfied segment at 63.3%, but the segment covering businesses with over $55 million in turnover didn't record any significant improvement, at just 67.6%. Norman Morris, communications director at Roy Morgan, said in a statement the banks are continuing to struggle. "It is obvious that a poor rating among business customers will impact on personal customer ratings yet this is often not clearly understood. In the case of the approximately two million small businesses; the owners' personal and business interests are closely interlinked, as is their banking." Part of the dissatisfaction comes due to interest rate levels. Although the banks have passed on the most recent rate cut to business products, traditionally business loans attract higher interest rates and banks are loathe to pass on any cut in the official rate. Peter Strong, executive director of COSBOA, told SmartCompany this morning the findings are apt given today's conference about small business access to finance. "I think this reflects just a drop in confidence in general," he says. "The other disappointment we're seeing is the difference between interest rates for consumers and businesses. They've come back closer, but why is there even a difference?" Most recently the big four passed on interest rate cuts to business customers, although ANZ was the only bank not to extend the same rate cut to business customers as individual mortgage holders. Such problems are what Strong hope to address today at the roundtable with attendees including Steven Munchenberg, the chief executive of the Australian Banking Association, along with COSBOA board members and a range of experts. Other topics of discussion include identifying the specific types of SMEs which want to grow, and how many of them need access to credit. "We just want more information," Strong says. Earlier this year the small business community was disappointed by the news the federal government would back down on legislation which would regulate small business credit. This story first appeared on SmartCompany.
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