Access to credit for small businesses is expected to be hindered further off the back of the banking royal commission, according to new research.
According to research commissioned by SME lender Scottish Pacific and conducted by East & Partners, which involved a survey of 1,257 of SME owners and senior managers across Australia, one in five SMEs already experienced royal commission-related funding difficulties during 2018.
The survey revealed that 22 per cent of respondents said that tighter credit policies, imposed by lenders amid scrutiny from the royal commission, had made it more difficult to access credit throughout 2018, with 34 per cent expecting funding challenges to intensify.
Reflecting on the research, Scottish Pacific CEO Peter Langham warned that changes adopted in response to Commissioner Kenneth Hayne’s final report should not further impede SME access to finance.
“The research shows by far the greatest reason business owners seek new finance is to fund their expansion opportunities. It’s the key reason given by 58 per cent of SMEs,” Mr Langham said.
“So, the easier it is for SMEs to get funds, the stronger the Australian economy will grow.”
He added: “Given recent economic forecasts, all the more reason that governments and the business community must prioritise making it easier, not more difficult, for SMEs to access funds.”
Mr Langham also urged the federal government to reconsider its response to broker remuneration reform proposed by Commissioner Hayne.
“This is also a key reason why the federal government should reconsider the broker fee changes recommended by the royal commission,” he said.
“Good brokers play a vital role by helping time-poor business owners find the right product and provider that best suits their needs, allowing the business and the economy to grow.”
Mr Langham also noted the alternative financing options available to small businesses that have been turned away by traditional lenders.
“Many SME owners have been rusted on to the banks out of habit,” he added. “Choice is good for SMEs, and there are many alternative finance options they now have available, as long as they make an informed choice knowing the benefits and risks of the products.”
[Related: Brokers to play key role in post-RC climate]