NAB offers compromise for SME definition
(15 March 2019 – Australia) National Australia Bank has extended its definition of small business banking customers however stopped short of fully embracing the recommendation from the royal commission.
NAB has moved to extend protections to customers with total debts of up to $5 million, up from $3 million, in response to the royal commission report.
The bank however did not go as far as the commission’s recommendation which would entitle businesses taking out multiple loans of less than $5 million to small business protections.
Currently, banks treat any firm with total debt of up to $3 million as a small business, but the commission said this should change to "any business or group employing fewer than 100 full-time equivalent employees, where the loan applied for is less than $5 million".
The definition is important because it gives borrowers extra protections in their loan contracts, whereas from the banks' perspective, these loans are seen as riskier.
NAB is the first of the big four to extend their definition.
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