Australian Banks Clear Out the Myths About Lending to Small Businesses
A bank official denied that Australian banks are imposing stricter measures in Land clearing Melbourne terms of approving loans for small and medium enterprises (SMEs) since the effect of the global financial crisis, the Australian Banking and Finance reported.
Reports have been claiming that banks have denied SMEs the chance to improve their businesses because their loans have not been approved by major and even non-major banks.
Phillip Godkin, the general manager of business banking at St. George, explained that their credit underwriting standards haven’t changed since the global financial crunch. But he also admitted that banks are more careful in terms of approving loans because the funds may not exactly be as available as before.
Mr. Godkin clarified though that tougher stance on loans are imposed on commercial property lending rather than on SMEs. He added in the report that the reason for a lesser availability of credit for SMEs lies in the fact that smaller and overseas banks have closed their doors and effectively pulled out of the market.
He said this at the Dun & Bradstreet AB+F Business of Banking luncheon in Melbourne.
In the report, Mr. Godkin admitted the banks have truly been affected by the financial crisis, making the market a little bit harder to basically all kinds of commercial loans.
A New Strategy
In order to make better decisions, St. George Bank launched a new approach for interviewing potential borrowers and customers, the Australian Banking and Finance reported. It said that the banks’ managers are required to interact with customers through video messaging, so that they can better decide whether or not a customer deserves to have his/her loan approved.
Mr. Godkin pointed out in the report that customers want personalized services. Most customers are looking for banks that know what they want and what they need. They need a relationship bank.
Steve Brown, Dun and Bradstreet’s director of consumer risk solutions, stated in the same report that SMEs make up 96 per cent of Australia’s commercial institutions. Out of that figure, 60 per cent of them or 1.2 million SMEs are unincorporated.
Serving the economy
Banks that closed their doors because of the financial crisis should not be criticized with regards to the decrease in the availability of credit, Mr Godkin said in the report. They folded because they were not being profitable. These banks should be lauded instead for adding a risk management overlay.
Instead of going to third- and fourth-tier lenders, small and medium enterprises are heading to ANZ for their business loans, the report stated.