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A report released 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 don’ts, with particular emphasis on preparing a business plan.
Lending to small businesses over 2015 reached its highest level on record according to the 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.
Münchenberg said,“Banks approved $88 billion in new small business loans last year, which is $11 billion more than two years ago.”
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.
CPA Australia Chief Executive Alex Malley said the ability of small business to articulate the how and why of their venture is extremely important to the success of their loan application.
“If we have small businesses growing, spending on new plant and equipment and expanding their markets, then they are sustaining and creating jobs and that’s precisely what our nation needs,” Malley said.
COSBOA CEO Peter Strong added, “This is a great initiative by the banking industry and will help people who want to start, buy or expand a business save time and stress.”
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.
“With further tax breaks for small businesses announced in last week’s Federal Budget, it’s a great time to be a small business in Australia.”
Photo credit: Glenn Hunt, The Australian Financial Review