SMEs blame royal commission for lending slow down
(24 September 2018 – Australia) The royal commission into financial services is being blamed for causing nervous banks to slow lending to small business, creating an unintended consequence of a credit crunch for SMEs.
Council of Small Business Australia chief executive Peter Strong said, “We’re hearing from our members credit from the banks is becoming much harder to get because of the royal commission.”
Small businesses have always found it challenging to access finance, but the problem has become more acute in recent months with the spotlight firmly on the big four banks lending practices.
The Australian Prudential Regulation Authority has been gradually tightening loan serviceability rules over recent years, forcing banks to apply tougher tests on borrowers’ income and expenses.
The royal commission has exacerbated the credit crackdown due to its highly legalistic interpretation of responsible lending laws, stricter loan serviceability rules enforced by the prudential regulator and weaker house prices.
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