Extended SME loan program, reduced guarantee

The Big Four banks have publicly welcomed the extension of the government’s SME stimulus lending program, but privately some sources have said the move would do little to support such areas of the economy like selling to the market. retail, hospitality and travel.

ANZ said yesterday that a third of recent inquiries came from “small businesses in the retail, accommodation and cafe and restaurant sectors, all of which have been significantly affected by the closures in Victoria and New Wales from South”.

Opening borders and removing bottlenecks would have a much bigger impact for these sectors in particular, experts said.

Banking sources also admitted that reducing the collateral to 50% would make it even more difficult to process loan approvals for SMEs hardest hit by the pandemic.

The reduction is the latest in a series of amendments to the scheme, which was expanded to include businesses that were not dependent on Jobkeeper in October. Banks have so far lent $ 7.3 billion through about 80,000 loans to SMEs through the program, but the figure remains well below the $ 40 billion originally announced.

Mr Kanevsky said lack of worker availability was the number one problem for all businesses of all sizes, not just SMEs. He pointed to the hospitality industry, where there was no shortage of demand, but the supply of workers was causing problems that would not be solved by the flow of cheap credit. Rather, it would create new problems.

“People cannot get the workforce. It’s not that these restaurants and bars can’t open because they don’t have the capacity to borrow, it’s the fact that they don’t have the people to open, ”Mr. Kanevsky.

“Allowing people to borrow more so they can pay more for their work just creates a different problem. It creates inflationary pressures so if you have open borders you can make sure we have the people to work in those jobs. “

Westpac said it saw a 160% week-over-week increase in loan requests through the program and a doubling of the amount of loans requested, with $ 600 million in requests since October. The bank did not say how many of the $ 600 million in loans were approved. He said the interest rates offered were as low as 2.58%.

Commonwealth Bank of Australia, which was the largest lender under the first program, said it issued $ 2.8 billion to more than 24,000 companies. CBA group director for corporate banking, Mike Vacy-Lyle, acknowledged that some sectors are under pressure, but said cheap financing would help SMEs invest for new growth.

“As the country reopens, it is fantastic to see a recovery in the industry, with many small businesses taking advantage of pent-up customer demand and investing for their future growth. At the same time, we know that some businesses have experienced a patchy recovery and continue to need additional support to resupply, rehire and generally get back to business, ”said Vacy-Lyle.

ANZ said its request volumes have doubled.

“In the last month alone, we’ve seen twice as many applications for the loan program,” said Isaac Rankin, general manager of ANZ for commercial and private banking.

The National Australia Bank is the largest player in the field of SMEs. In the past 12 months, its loans to the agricultural sector alone reached $ 35 billion, up 14%, as more farmers used the government’s instant asset write-off program to purchase equipment. and machines.

Andrew Irvine, NAB’s business and private banking chief, said government loans were helpful for businesses looking to capitalize on cheap money to grow.

Federal government SME Stimulus Loans are a good option for businesses that need additional capital, helping them source or grow to make the most of bumper Christmas sales,” said Mr. Irvine.

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