By The Editor
Our fair country has made it through the worst of the recent economic downturn. But, despite an improving economy, anecdotal evidence suggests that access to finance for small business is getting harder, not easier.
In an effort to get to the bottom of this issue, the Federal Coalition has announced an inquiry into small business access to finance.
The Coalition will refer the following matters to the Senate Economics Reference Committee for inquiry and report by 30 June 2010. In particular, the inquiry will examine the availability, affordability and terms of financing needed to support small business as the engine-room of the Australian economy.
This includes:
- the costs, terms and conditions of finance and changes to lending policies and practices affecting small businesses;
- the importance of reasonable access to funding to support small business expansion and the sector’s contribution to employment growth and economic recovery;
- the state of competition in small business lending and the impact of the Government’s banking guarantees;
- opportunities and obstacles to other forms of financing (e.g. equity to support small business ‘start ups’, liquidity, growth and expansion);
- policies, practices and strategies to enhance access to small business finance in other countries; and
- any other related matters.
In March last year, VECCI conducted a survey of 500 Victorian businesses on Business Finance and Investment, which found that over the previous six months access to capital has been compromised.
Thirty per cent of respondents indicated that availability of capital was the key barrier to investment, while 17 per cent cited the cost of capital.
VECCI will be conducting another identical survey early next year to ascertain whether access to capital has improved or worsened.
What do you think about this issue? Have you experienced any difficulty in gaining access to finance for your business?
Let us know in the comments!
It’s definately a case of 2 steps forward, 1 step back. I think that this a great step forward and needs further attention. I also commend your actions on this!
We have had to use our house as finance for our business. We are fortunately in the growth stage and have been getting temporary o/drafts to assist until the end of last year. The banks now insist a permanent o/draft is needed and the fees invoived in this are high. We have never been in a siottuation of not paying theo/draft bank. They believe it is not enough just to get the interest they get from us they have to charge more fees by demanding a further equity in our house. Small business employ many people take all the risk and do not get any help from the banks
Hi,
I read with interest your article on the inquiry into finance for small business and encourage those involved in the process to get on with it as soon as possible and take some productive action with the findings. Many business start up in a small or micro form and sadly many fall by the wayside because they cannot resource themselves appropriately in order to survive long term,let alone grow significantly. It’s a shame, because a well run, profitable business provides jobs and other opportunities for the many suppliers, staff and owners that are involved.
As a small business owner myself, who prides themselves on paying our staff and our suppliers on time I am frustrated with the time frame that it takes our customers to pay us and therefore my inability to obtain the finance that is required to operate on a daily basis. Ultimately this hinders our ability to grow and create further opportunities. We need to find a better way to provide small businesses with the start up investment and ongoing working capital that they require to get themselves off the ground and fly!
Increase of $700pa or 58% in O/D Facility Fees. As a small home based, building design business of 5 staff, all expenses have to be strictly budgeted for..
We have had to diversify due to the global economic downturn, however as soon as we think we are starting to make progress increases in interest rates, bank fees, utility fees etc etc keep knocking us sideways.
I commend your action on this inquiry. As we move into our 3rd year of operation, getting extention to our OD and / or sourcing funds from other instituitions has not only been very difficult – but very expensive. All seem to lock you in to high fees even when they have very strong security over your equity.