Australia’s major retail banks should be more flexible in lending to small and medium businesses, according to the Executive Director of a new Australian bank, Tyro Payments.
“In the 21st century, it’s a ridiculous restriction that Australia’s big banks are insisting that any small business loan must typically be collateralised by property, rather than the cashflow of the business itself,” Tyro Payments Executive Director Jost Stollmann said.
The comments follow release this week of the findings of a Government-commissioned inquiry into bank-lending practices.
The Australian Small Business and Family Enterprise Ombudsman’s (ASBFEO) report based on the inquiry into cases of alleged small-business mistreatment by the banks includes 15 recommendations – four to the federal government and 11 to the banking sector.
ASBFEO Ombudsman Kate Carnell conducted hearings with the big four banks at the end of last year as part of the inquiry, which concluded that loan contract arrangements between banks and small businesses disadvantaged borrowers.
Tyro also alleges that “banking red tape” is costing Australia’s estimated 880,000 SMEs four weeks’ productive work time a year. According to its research, this amounts to a loss of almost $7 billion annually.
Tyro is the first new Australian bank to emerge in 18 years and provides unsecured cashflow lending to SMEs.
