Ombudsman calls for more support for small business

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell says a lack of access to funding is the biggest barrier to growth for small businesses.

“The most recent SME Growth Index revealed one in five SMEs are experiencing cash flow problems due to business loans being rejected,” Ms Carnell said.

“Even the Australian Banking Association has acknowledged that small business loan applications have fallen by 33 per cent since 2014.”

The comments came in response to the RBA cutting the official cash rate to an all-time-low of 0.75 per cent.

Credit squeeze affecting small business

Ms Carnell says she agrees with RBA Governor Philip Lowe’s view that small business needs support from our financial institutions.

“In cutting the official cash rate to an all-time-low of 0.75 per cent, RBA Governor Philip Lowe made several pertinent observations about the credit squeeze affecting the Australian small business sector and how that’s effecting the economy more broadly,” she said.

“Most would agree with Dr Lowe’s comment that we will all be better off if businesses have the confidence to expand, invest, innovate and hire people.

“Dr Lowe says lending standards have strengthened, but the ‘pendulum may have swung a bit too far’ in some areas.

“Vitally, Dr Lowe made it clear that our financial institutions should support small businesses, stating ‘lenders should not be so scared of making a loan that goes bad that they don’t provide the credit the economy needs’.

Advice to be heeded

Ms Carnell says the RBA Governor’s advice should be heeded.

“It’s time we all sit up and listen to the RBA Governor,” she said.

“If our financial institutions change the way they do business with SMEs, it might just give small businesses the confidence they need to grow, which would be of significant benefit to the Australian economy.”

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