Federal Small Business Minister Craig Emerson has called a meeting of bankers and small business people to try and sort out whether banks have really tightened the screws on SMEs.
Small business groups such as the Council of Small Business Organisations of Australia (COSBOA) claim their members have been shunned by the banks since the start of the credit crisis.
Newly-appointed COSBOA chief executive Jaye Radisich says she has heard stories of loan rates being increased as banks have re-adjusted risk ratings, lines of credit being slashed and new lending dying up.
But the big banks insist they are not changing their lending policies for small business. Last week, ANZ announced $8 billion of new funding for SMEs.
Radisich says she welcomes the chance to sit down with the banks and the Government and thrash the issue out at the meeting, to be held in Melbourne next Friday.
“Our members can produce as many stories as the banks want. We’re happy to prove our point.”
Radisich is particularly disappointed that the banks have not passed on the full cuts to official interest rates to small business customers.
Data from research firm InfoChoice found that while the Reserve Bank has lowered the official cash rate by 4% in the last six months, business loans have only fallen by an average of 2.68% and overdrafts have fallen by an average of 2.41%.
“We dispute the idea that the banks have not passed on the full RBA cuts because small business has a higher risk rating,” Radisich says.
“Many of these small business loans are actually secured by family homes… we don’t like the wool being pulled over our eyes.”
Craig Emerson (whose office did not respond to calls from SmartCompany this morning) told The Australian he wants to get to the bottom of the issue.
“The only way of testing this is a roundtable where practical cases are put in front of the banks.
“If the banks deserve criticism based on a proper analysis of the situation, I will criticise them in the strongest possible terms to do better, but we have to get the evidence.”
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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