Fed: Retailers back attack on banks over small business

AAP General News (Australia)
04-17-2009
Fed: Retailers back attack on banks over small business

By Colin Brinsden, Economics Correspondent

CANBERRA, April 17 AAP - Retailers support the federal government's call for banks
to pass on official interest rate cuts, saying some financial institutions haven't got
a clue about small business.

Small Business Minister Craig Emerson told the banks on Thursday they played a "vital"

role in keeping small business trading.

"The purpose of the Reserve Bank cutting interest rates is to stimulate the economy
and it is essential that this stimulus flows on to small business," Dr Emerson said.

Australian Retailers Association (ARA) executive director Richard Evans on Friday said
he backed the minister's view that the major banks aren't doing enough for small business.

"Minister Emerson has clearly reminded banks of their responsibility to provide adequate
credit flows to the small business sector, and to pass on to small business Reserve Bank
interest rate cuts to the maximum extent possible," Mr Evans said in a statement.

He said a snap poll of small and medium-sized retailers in March found that in the
past three months alone, 25 per cent had attempted to renegotiate lending facilities with
their banks, but of these 45 per cent had difficulty renegotiating loans and lines of
credit.

Only four per cent of respondents had interest rate cuts passed on to credit cards,
while 70 per cent with overdraft facilities hadn't been passed on interest rate reductions.

And more than 50 per cent with business loans were still waiting to feel the effects
of interest rate cuts.

Mr Evans said small business owners, including mum and dad retailers, having difficulty
accessing credit were taking out personal loans and second mortgages to keep businesses
alive.

"For small retailers, the fact remains it is a difficult and costly process to borrow
from banks who are lured by the obvious benefit of other lucrative markets and don't understand
the small business sector," he said.

"Australia's big banks need to generate new low-rate credit cards and other lending
products for small business and they need to begin to collect data about how small business
operates and accesses funds.

"Banks are focussed on the big end of town to the detriment of retail sector."

He said the Australian Bankers Association (ABA) was not close enough to the real small
business market, which was doing it tough right now.

"Fact sheets recently developed by the ABA may make big banks feel like they've addressed
the issue of small business access to credit, but the fact remains banks have no clue
about the SME market," he said.

AAP cb/so/tnf

KEYWORD: RATES RETAILERS

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