Ralph Norris came on as head of the Commonwealth Bank, admitted that the bank's relationship with small business could be better and he promised to lift the bank's game with the sector.
Historically, micro or very small businesses were not on the radar screen to banks unless the business was flying high and/or the business owners were prepared to hand over the deeds to their house. The banks have learned that SMEs can be very profitable. According to the Australian:
One of the greatest ironies over the past two years is that big business has discovered that small businesses are potentially great customers. They spend more on things such as banking services, IT services and telecommunications. And on top of that, they are big buyers of small-business equipment.The article goes on to discuss a new trend in Australian small business banking: partnering with mortgage brokers:
An interesting development for small business and gaining access to loans is the arrival of mortgage brokers now chasing small-business customers. Pam Sullivan, director of All Finance Services in Joondalup, Western Australia, and a director of the Mortgage Finance Association of Australia, says residential property mortgage brokers are looking to diversify into commercial lending because in some states in Australia the housing market has slowed considerably.
"Brokers wanting to enter the commercial arena either need to undertake a commercial course to obtain the extra knowledge or work on a buddy system with another broker who can assist them," she said. "Several lenders are now paying referral fees to brokers for commercial business which could also be attractive to a broker who is not experienced in this area."
Sullivan expects small business will have access to a greater range of lenders and products to suit their individual needs.
"If they go to their bank they only have access to what that lender can offer which is not always the best one out there," she said.
This will include helping small businesses into cash flow lending opportunities, which if we take a line on the success of mortgage brokers in helping to provide better loans at better rates of interest, has to be a good thing, in general.