Business banking in Australia isn't working. Small-medium sized businesses cannot access capital to grow and develop their businesses. Banks are only interested in lending to businesses against property and still the experience is poor. Just read East & Partners recent survey:
"Deteriorating customer loyalty is matched by similar declines in empathy, satisfaction and most importantly customer advocacy. Driven by credit experiences, small businesses previously conveyed a strong view that provider choice and competition for their business was lacking."
Online non-bank finance providers - 'altfi' or 'fintech' - are starting to fill the void.
Here's one way to look at it:
Terms and conditions vary. Some of the providers in the sub-$150k bracket charge up to 65% APR. Speed of execution and customer service are important but value for money is just as important. Thankfully, there are a few offering much more reasonable terms for better quality customers, like InvoiceX.
Australian Chamber of Commerce and Industry chief Kate Carnell recently said:
Access to capital from the big banks is a hindrance holding small business back. Ms Carnell said big banks were typically requiring mortgage security to be pledged for small business loans or otherwise providing credit cards with high interest rates. Alternative funding sources such as those from crowdfunding and other online lenders must be supported by the government, she told the summit.
Ms Carnell said it was understandable that banks wanted to minimise risk and maximise return on equity but “we went through the National Reform Summit where many comments were made about generating growth and productivity and innovation – which requires entrepreneurs growing and employing. That is all true, but none of it will happen if we have an environment where small business is not able to borrow. It seems like we skirt that issue a bit. The banks say there are no problems, of course they are willing to lend. Well, they are, but only when you can offer them a house.”
Sydney Morning Herald, 30 August 2015