Natural disasters and banks, banks, banks – big concerns for SMEs

Australian Small to Medium Enterprises (SMEs) have registered serious concerns about the potential impact of the recent natural disasters on the country’s economy as well as disillusions when it comes to government and banking.

When asked as part of a recent, quarterly national survey commissioned by WHK Melbourne, an overwhelming 79.2% of small and medium businesses stated that they believed that recent floods, cyclones and bush fires would spell trouble for the business world.

It is also important to note that, according to ABS statistics, the hardest hit regions of Queensland and Victoria are home to more than a third of Australia’s SME businesses.


Natural disasters were not the only major concern highlighted by the March 2011 WHK SME Pulse Survey. An overwhelming 84.8% of all participants thought SMEs were not on the Government agenda.

Chief Executive of WHK Melbourne Carl Walsh commented: ‘The perception is that Government initiatives and current policy are not addressing the needs of what is the largest employing sector of Australian business. SMEs are the engine room of the Australian economy, and government needs recognise and support the vital role these businesses play.’

Banking and lending

The survey also focused on discovering the latest attitudes and opinions of SMEs when it comes to banking and lending. Nearly all respondents (94.2%) said they did not feel their bank had been loyal to them over the past six months. This was a marked increase from the 82% who said the same thing in WHK’s August 2010 survey. Meanwhile, eight out of ten respondents said access to bank lending for their businesses had not eased over the past year.

The WHK SME Pulse Surveys have shown that 40% of SMEs have experienced increases to their interest rates in the past three consecutive quarters. Although there are signs of some stabilisation in interest rates for SMEs with more than half experiencing no change, a mere 2.1% of respondents registered a decrease in the February survey. The average rate of increase did, however, retreat in the past quarter to 5.2% of the businesses previous rate, compared to 7.9% in August 2010.

The number of SMEs planning to increase the size of their lending facilities grew for the third quarter running to 44.1%. Those SMEs planning an increase are planning to do so by more than a third of current levels, which is another steady increase on previous survey results. Meanwhile, only 8.1% said they would be decreasing their lending facilities whilst 47.8% said they had no changes planned in this area.

Carl Walsh continued: ‘The fact that a large proportion of businesses surveyed have registered dissatisfaction at the service they are receiving from their financial institutions is hardly a surprising result. Through our surveys we have seen three successive quarters of brutal re-pricing.

‘SMEs have been vocal about difficulties surrounding access to and the increasing cost of credit and the restrictions this can cause to their growth. The fact that there is such dissatisfaction but very few SMEs are willing to make a change when it comes to their financial institutions demonstrates a perceived lack of competition and choice.

‘SME borrowers have very little influence whilst the big four wield an incredible amount of power over the space.

‘The results show that SMEs are planning to increase borrowing. This is probably because they have exhausted their ability to equity fund their businesses and the only course open to them is to borrow in order to grow.

‘We hope that banks have now exhausted their ability to re-price lending rates for SMEs and that we therefore see a decrease in rate increases going forward.

‘Much of Australia’s innovation happens within the vitally important SME sector. Banks and government need to realise that if SMEs suffer, the Australian economy as a whole will suffer.’

The survey

WHK Melbourne is part of the WHK group – the fifth largest accounting group in Australasia. The company has been working with Small and Medium Enterprises since 1997 and is committed to providing a voice for the sector.

Carl Walsh continued: ‘Our survey aims to provide an accurate and up-to-date representation of the SME space. We seek to deliver a credible insight into opinions, trends, perceptions and concerns.

‘It’s about raising awareness of the issues that are inhibiting the growth of Australian SMEs so that they in turn can make informed business decisions that will assist in securing their future.’

A total of 531 companies participated from all states across the nation. Interviews were conducted with the person holding the primary responsibility for the business’ banking relationships.

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