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Lending to small businesses over 2015 reached its highest level on record according to an ABA report, and the average interest rate on small business loans is at a record low. Of the 2 million small businesses in Australian, nearly half have a bank loan and almost a quarter of businesses have access to a credit card but no other debt.
A small business loan is for less than $2 million. In 2015, just under 60 percent of small business loans had a value less than $100,000, while around 10 percent were for amounts between $500,000 and $2 million.
NAB will soon launch a new unsecured personal loan capped at $50,000 for small businesses, in response to the large portion of aspiring entrepreneurs in the country.
“The Australian economy relies on entrepreneurs who innovate, establish new industries and create jobs,” said NAB Group’s Angela Mentis.
NAB research revealed that one third of Australians have business owner aspirations, with half of them being a part of the millennial generation. The data found cash flow support from banks was critical for young startups to grow.
“In the early days of business ownership, small businesses often only require small amounts of funding – and many owners don’t have a property or other significant assets to secure a loan against,” said Mentis.
“We stand ready to back Australian businesses with great ideas, providing simple, quick funding solutions to support small businesses looking to grow”.
The QuickBiz Loan will be available at 13.85 percent fixed interest rate with no setup or monthly fees, to business applicants that have been in operation for at least a full year. Eligible business types are sole traders, partnerships (with two or less partners) and private companies with less than two directors.
A report released in May 2016, by the Australian Bankers’ Association (ABA), shows that banks’ lending to the small business sector is strong, but access to bank loans and finance is still a difficult process for many small businesses.
“To help with this, we have developed a new website that explains what banks look for in assessing loan applications. It also shows how different types of finance may suit different small businesses,” said Steven Münchenberg, ABA Chief Executive.
The new website – financingyoursmallbusiness.com.au –has been launched in collaboration with CPA Australia and with the support of the Council of Small Businesses of Australia (COSBOA) and NSW Business Chamber. It includes a step-by-step guide to completing a loan application, including the do’s and dont’s, with particular emphasis on preparing a business plan.
NSW Business Chamber Chief Executive Stephen Cartwright said, “For small to medium businesses having access to finance is crucial to their success. Having this resource for SMEs to understand the right type of finance for their needs will help maximise their potential and in turn, help Australia’s economy to grow.”
Münchenberg said over the past couple of years the ABA has worked with COSBOA and CPA Australia to better understand the issues faced by small businesses.
“We realised that small businesses would benefit from guidance on how to present information in a loan application that goes beyond just providing the company accounts,” he said.