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Small business loans difficult, spawning Australian online financing market

The Reserve Bank of Australia has criticized large banks for failing to meet financing requirements for small business expansion. Reserve Bank of Australia Deputy Governor Guy Debelle said that at present, it is difficult for even high-quality small business to obtain loans from banks.

At the UBS conference in Sydney, Guy Debelle said: “This is not a lack of entrepreneurial spirit, but the lack of entrepreneurial financing has become a major factor affecting economic growth.”

According to statistics, corporate loan growth in Australia this year is about 4%. In this earnings season, major banks have indicated that corporate credit income has become a drag. Westpac also called on the government to adopt more stable policy measures to enhance corporate confidence. In response, Guy Debelle countered that the bank’s own lending policy has disadvantages, which are caused by improper loan limit measures implemented by small-scale enterprises that urgently need funds to expand and then promote economic growth.

Debelle said in a speech: “Large-scale companies can raise funds through the banking system or the capital market, but our survey of smaller companies shows that they are often restricted by many conditions when lending.

For the past two decades, the RBA has hosted “small-business panels” to understand market sentiment and loan disbursement. According to the results of recent discussions at expert forums, some high-quality small businesses have expressed difficulties in persuading banks to lend.

Debelle said: “There were many successful small companies participating in the symposium, and their business growth prospects are clear. However, the financing difficulties have only increased. This is not the difficult problem for small companies to ensure their operations. It’s the lending challenge to expand and grow. In other words, this is the crux of the problem. “

“These companies can obtain financing at this stage to ensure the normal operation of their existing business. But when moving to the next step, because of the uncertainty, they may not be able to predict cash flow. Because the cash flow cannot be predicted, the bank will not approve the loan. This seems to be the main problem that makes it difficult for small businesses to lend. “

At present, the main reasons why many smaller companies choose fintech innovation platforms for lending are: On the one hand, banks often use property mortgages as a prerequisite for loans; on the other hand, small business owners are often reluctant to treat their homes with The future of business is linked.

Yanir Yakutiel, CEO of online corporate lending platform Sail, points out that banks have ignored the needs of many customers. “In theory, we are in a competitive relationship with banks, but in reality it is not. Our customers are not the ones that banks want at all,” he said.

Xero, a cloud computing company listed on the ASX, has also created a financing platform. The platform has become a link between small business customers and hundreds of financial innovation companies. Chris Teeling, head of corporate strategy, said that with the increasing number of instant loan options facing small businesses, competition in the future will also increase.

He said: “At some stage in the future, if you have capital requirements, there is always a platform that can meet your requirements. With the progress of the industry and technological innovation, a large number of new startups will emerge.”

In terms of economic fundamentals, UBS Chief Strategy Analyst David Cassidy said that capital expenditures will increase in the next few years, but given Labor ’s political claims to limit capital gains and eliminate negative tax deductions, his Worries about development.

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Robin Bell

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