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Retailers Call on Banks to Learn About Small Business

Peak industry body the Australian Retailers Association (ARA) said Australian banks have a lot to learn about the current state of SME finance requirements after Minister Emerson’s Small Business access to credit during the Global Financial Crisis roundtable today.

ARA Executive Director Richard Evans said Australia's big banks are disconnected from the small business market after clearly demonstrating they don't believe there is an issue with small business access to credit.

"Clearly small business doesn't appear on the banking sector's economic data radar in any significant way - with banks stating 60 percent of small businesses don't borrow - indicating they are not close enough to the real small business market doing it tough right now," Evans said.

"Small business owners, including mum and dad retailers, do borrow. They take out personal loans and they access second mortgages for their homes for their businesses to survive.

"Most commonly they 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 retailers have been passed on credit card interest rate cuts*.

"Australia's big banks need to generate new low-rate credit cards and other lending products for small business; they have to work with industry associations to generate small business survival strategies and they need to begin to collect data about how small business operates and accesses funds.

"Reductions in credit card interest rates or new low-interest credit card products may also address the current issue of consumer trepidation to inject funds back into the economy via the retail hub.

"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.

"This Rudd Government initiative is a very good first step to break down the operational barriers between the small business sector and the banks. The senior bankers attending were forthright in their defence but hopefully equally enlightened to the needs of small business," 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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