Government to help SMEs knocked back by the banks

The Federal Government will establish a clearing house to assist SMEs who have had trouble obtaining funding from their banks. The announcement comes after Friday’s SME banking roundtable hosted by Federal Small Business Minister Craig Emerson and attended by the major banks, the Australian Bankers’ Association and various small business groups.

Under Emerson’s plan, small businesses that are having trouble with access to and the cost of funding can lodge a written complaint with the Minister’s office. These complaints will be forwarded to the Australian Bankers Association, who will then pass them on to senior management at the bank in question.

The chief executive of the Council of Small Business Organisations of Australia, Jaye Radisich, welcomed Emerson’s move and says anything that helps shine a spotlight on the issue of SME funding is helpful.

But she says the minister has admitted that the clearing house will have no actual mandate to force banks to take action.

“The small business shouldn’t be getting their hopes up. It’s simply a point of contact to get their issues on the record.”

Radisich was pleased with that she called a “genuine commitment” from individual banks to working further on the issue of SME funding, but argues there is a long way to go before the issues are resolved.  

“The roundtable was worthwhile, but there’s just a lot of work to do because we’re at a pretty pointy situation right now.”

For example, Radisich says it is crucial that the banks ensure those staff actually dealing with small businesses – such as branch managers, loan officers and call centre staff – are made aware of this new commitment to help SMEs.

She says SMEs report that the staff at these lower levels often use the excuse of not having enough authority to deal with SME funding issues.

“The banks need to ensure that their entire staffing chain understands their own position, and what they can and can’t, and will and won’t do, for small businesses.”

The banks have agreed to pass on any reduction in costs to SMEs “to the maximum extent possible” but it remains to be seen how quickly this will occur.

Related articles:

• Online SME loan finder launched, but business lending rates remain high
• Bad debts just starting to spread through SME sector