MGI Perth

30 March 2010

SME financing gets tougher

Mark Fenton-Jones

Small businesses are being asked to complete an online survey about access to finance.

The Council of Small Business Organisations of Australia will use the survey results in its submission to the Senate's inquiry into access of small business to finance.

Cosboa identified banking and finance issues as the No.1 concern for small businesses when it released its recent Back to Business survey in partnership with Telstra Business.

Cosboa's chief executive, Jaye Radisich, said the survey would provide the evidence that more needed to be done to help improve access to finance for small businesses.

"We want to learn more about the challenges small businesses have faced getting finance in the last year, and what they think should be done to improve the system," Ms Radisich said.

Accounting firm MGI already heard from family and privately owned businesses about what they think of bank lending practices. It undertook a survey with RMIT University into the impact of the global financial crisis on small business.

Nearly 60 per cent of businesses had experienced difficulty or were undecided about their ability to access funds for business activities.

"This statistic becomes even more disturbing given 90 per cent of respondents bank with one of the major four banks," Mal Di Giulio, the executive chairman of MGI Australasia, recently wrote.

The industries experiening the greatest difficulty in accessing banking funds were in the technology, equipment and communication services and primary industries.

Researchers East & Partners, which released their Business Banking Customer Satisfaction Monitor this month, found that small business' dissatisfaction with banks was worsening. The market average business banking satisfaction for January 2010 was 4.69 (out of 10), down from 4.71 in the previous month.

"Incredibly, two of the Big Four banks achieve a rating of less than 3," said Robert Morgan, the head of market analysis at East & Partners. "The overall satisfaction rating is being heavily weighed down by certain banks' performance in the SME segment."

Mr Morgan described the result at the beginning of 2010 as the continuation of a downward trend that was evident last year, a feature than Cosboa's survey should no doubt pick up.

Of the Big Four, only National Australia Bank gained an improved rating, maintaining its No.1 position among the four with a score of 6.54 this month.

"The Big Four have history, they have form, when it comes to being greedy and finding any excuse they can to increase fees and costs for small business owners," said the chief executive of the National Independent Retailers Association, Peter Strong.

"Many bank have advertising about how they are small business friendly that is palpably false advertising and they need to be made to provide the full service they have promised."

Mr Strong, who is also a director of Molonglo Financial Services that manages the Bendigo Community Banks at Calwell and Wanniassa in the ACT, wants the banks to pay back the money they have "gouged" from all Australians.

One bank seeking to cosy up to small business is Westpac's St George, which launched a Business Mentoring Program, a nine month series of business coaching workshops, to be offered free to more than 1200 Australian small businesses.

The workshops, which are valued at $2500 per participant but free to customers, began last week at 24 locations across Australia.

Source: The Australian Financial Review, 30 March 2010

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MGI Perth has a specialist finance service to assist clients in obtaining lending. We have a good panel of business lenders to draw upon which is providing our clients with the right results. To speak to our Finance Director, David James, email finance@mgiperth.com.au or phone 08 9463 2466 for more information.

For information about MGI Perth Director, Mal Di Giulio, who was quoted in this article, click here.