Businesses struggle with high lending rates
(19 January 2012 – Australia) The latest Reserve Bank of Australia (RBA) figures show that over $55 billion was on loan to small to medium businesses at variable rates of 9 percent or more.
The pricey lending has surged by almost a quarter in less than 18 months, prompting some to announce banks are bleeding customers dry.
Even more frightening, the amount of money being lent at credit card-like interest rates in excess of 15 percent has surged by nearly 40 percent to A$2.3 billion.
The September 2011 figures show the crippling price small operators have to pay just to secure credit, with the major banks growing increasingly adverse to the higher risks associated with businesses lending.
Suncorp, which boasts one of the lowest business mortgage rates on the market, said that it had noticed an influx of businesses inquiring about its products due to 'unfair' rates from the big banks.
Suncorp executive manager for business lending Mark Harper said the issue for most banks was they couldn't determine what was a high risk when providing to small businesses.
'I think what's happened now is they've really pushed through some notable increases particularly at the riskier ends of their books - business lending,' Harper said.
'When (banks) get it wrong, a lot of bad business loans can put a bank out of business.'
Even more frightening, the amount of money being lent at credit card-like interest rates in excess of 15 percent has surged by nearly 40 percent to A$2.3 billion.
The September 2011 figures show the crippling price small operators have to pay just to secure credit, with the major banks growing increasingly adverse to the higher risks associated with businesses lending.
Suncorp, which boasts one of the lowest business mortgage rates on the market, said that it had noticed an influx of businesses inquiring about its products due to 'unfair' rates from the big banks.
Suncorp executive manager for business lending Mark Harper said the issue for most banks was they couldn't determine what was a high risk when providing to small businesses.
'I think what's happened now is they've really pushed through some notable increases particularly at the riskier ends of their books - business lending,' Harper said.
'When (banks) get it wrong, a lot of bad business loans can put a bank out of business.'
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