Small businesses loan application gripes to the fore
(4 September 2019 - Australia) Nearly one in two SMEs want to borrow money in the next year but are uncertain of their borrowing capacity in addition to loan documentation confusion and falling trust in banks according to new research from Judo Bank.
Judo Bank’s second annual SME Banking Insights Annual Report is based on direct interviews with 1751 small business owners, CFOs and corporate treasurers. The research reveals growing mistrust with Australian banks and antagonism around loan processing and credit approval turnaround times in particular.
The report found that almost one in two SMEs sought new finance in the last year of an average value of A$1.1 million. Three out of four SMEs that sought new borrowings in 2018/19 succeeded for an average sum of A$800,000, while one in four SMEs were unsuccessful. According to the Judo Bank report, the current funding “gap” for businesses with a turnover of up to A$20 million has grown in the past year from A$83 billion to A$90 billion. The report made it clear that the lack of funding was holding back SMEs and that the credit crisis would have a serious impact on the national economy since SMEs accounted for up to 70 percent of Australian employment.
“The research showed that the softening of SME credit was definitely not a demand issue as the big banks claim but entirely a problem with supply. Our major banks gave up on SMEs long ago, and this is reflected in the growing finance gap highlighted in the Judo Bank commissioned report. Many SMEs have obviously concluded that the big banks simply have no appetite for their financing requirements. And that may explain why SME customers remain deeply sceptical about the major banks and unhappy with the services on offer” stated Judo CFO Chris Bayliss. “Small business owners are crying out for financing so that they can use the money to grow their business, employ more workers, and pay higher wages which is exactly what Australia needs right now” Mr Bayliss added.