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Retailers: Banks still have no clue about small business

Peak industry body the Australian Retailers Association (ARA) has supported Minister Emerson's view yesterday that Australia's big banks aren't doing enough for small business.

• Only four percent of retailers have received interest rate cuts on credit cards
• 70 percent of retailers with overdraft facilities haven't received interest rate cuts
• Over 50 percent of SME retailers with business loans haven't received rate cuts

 ARA Executive Director Richard Evans said the Australian Bankers Association (ABA) - who has stated there is a reduced demand for lending to small business - are not close enough to the real small business market doing it tough right now.

"Fact sheets recently developed by the ABA may make big banks feel like they've addressed the issue of small business access to credit, but the fact remains banks have no clue about the SME market.

"Minister Emerson has clearly reminded banks of their responsibility to provide adequate credit flows to the small business sector and to pass on to small business Reserve Bank interest rate cuts to the maximum extent possible. According to ARA research*, banks are failing to live up to this responsibility.

"A snap poll of SME retailers in March revealed, in the last three months alone, 25 percent of SME retailers have attempted to renegotiate lending facilities with their banks. Of these, over 45 percent are having difficulty renegotiating loans and lines of credit.

"Small business owners commonly use their personal credit cards to fund their day-to-day operations such as cash flow and small capital equipment purchases. However, only four percent of SME retailers have had interest rate cuts passed onto credit cards.

"A further 70 percent of SME retailers with overdraft facilities haven't been passed on interest rate reductions. And over 50 percent of SME retailers with business loans are still waiting to feel the effects of interest rate cuts.

"Small business owners, including mum and dad retailers, having difficulty accessing credit still borrow. They take out personal loans and they access second mortgages for their businesses to survive.

"Australia's big banks need to generate new low-rate credit cards and other lending products for small business and they need to begin to collect data about how small business operates and access funds. Banks are focussed on the big end of town to the detriment of retail sector.  

"For small retailers, the fact remains it is a difficult and costly processes to borrow from a banks who are lured by the obvious benefit of other lucrative markets and don't understand the small business sector," Evans said.

For over 104 years, the Australian Retailers Association (ARA) has been the peak industry body in Australia's $292 billion retail sector which employs over 1.5 million people. As an incorporated employer body under the Workplace Relations Act and with a range of member services including business consulting, policy development, advocacy and education, the ARA promotes and protects over 5000 independent and national retailers throughout Australia. Visit www.retail.org.au or call 1300 368 041.

*Australian Retailers Association (ARA) industry poll conducted 26 February - 2 March 09.

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