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Financial Challenges for Australian Small Businesses

Written on the 5 September 2018 by Nathan Drew, Fox Finance Group

Financial Challenges for Australian Small Businesses

 

Financial Challenges for Australian Small Businesses

A round table discussion was recently hosted by the Reserve Bank of Australia with representatives from the Council of Small Business Australia (COSBOA), the Australian Banking Association (ABA), the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA).

The round table was chaired by Philip Lowe, governor of the Reserve Bank and highlighted some challenges that have been set out by SME representatives in attendance that included:

1. Access to finance for start-ups and business expansion;
2. Barriers to the comparison and switching between products and lenders;
3. Over-reliance on secured lending and the role of housing and personal guarantees;
4. Customising banking products for small business; and
5. The administrative burden of the loan application process.

The good news is that some of our Australian banking institutions share similar views in these perspectives and are continuing internal discussions within their own ranks on the steps that they need to take to address the concerns of small business owners Australia wide.

Financial Institutions Australia wide are looking at ways to offer more flexible lending products with less barriers to gain access to necessary funding to help SMEs grow. The roundtable also heard some suggestions on how to improve the accessibility of information for small businesses about their financing options. This will largely be supported by the Finance Broker industry with qualified financial advice being offered to SMEs via trusted Broker Networks.

The roundtable discussed some other policy initiatives that are currently underway, including the introduction of comprehensive credit reporting and open banking. Participants agreed that these initiatives could help improve access to finance, and the Reserve Bank will continue to monitor developments closely.

Following the meeting, the RBA released the following statement: "Small businesses are very important for the economy. They generate significant employment growth, drive innovation and boost competition in markets. Access to external finance is an important issue for many small businesses, particularly when they are looking to expand."

ABA CEO Anna Bligh stressed the importance of strengthening communication between lenders and small business. "Small business is the engine room of the Australian economy, accounting for more than 40 per cent of all jobs or around 4.7 million people," Ms Bligh said.

The Small Business Finance Advisory Panel was established by the Reserve Bank in 1993 and meets annually to discuss issues relating to the provision of finance as well as the broader economic environment for small businesses.

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We pride ourselves on the unique personalised service that we provide our SME Clients. We can help you either over the phone, via email, at your home, at your work or at your own business.

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Author: Nathan Drew, Fox Finance Group
About: CEO - Fox Finance Group