Banks to help with small business borrowing
The big banks are finally starting to listen to the financial needs of small business when it comes to lending and borrowing, with the Australian Banking Association announcing it will work closer with small businesses to provide greater financial assistance.
The move comes after small business minister Craig Emerson put banks and small business lending in the spotlight, claiming the big banks were not doing enough to help small business. Mr. Emerson announced that if a small business had an application for credit refused by a financial institution, they will have a second chance to access credit by appealing to the government.
The banks have now pledged that reductions in rates will be passed on to small business customers to the maximum extent possible. The Australian Banking Association will also use it’s small business banking website – www.smallbusinessbanking.com.au – to provide detailed information for businesses on how to apply for credit.
Australian Retailers Association executive director Richard Evans has welcomed the move, but believes the banks still do not completely understand the financial needs of small businesses.
“Small business doesn’t appear on the banking sector’s economic data radar in any significant way. The banks stated that 60 percent of small businesses don’t borrow, which indicates that they are not close enough to the small business market.
“The reality is that many small and medium businesses, especially at the smaller end, do not use the business finance facilities offered by the banks.”
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Borrowing From Your Own Company
As opposed to regular personal loans, when you borrow from your own company you will not have to go through complex application processes. Instead, you will only have to take some financial and accounting precautions to make sure that the whole process remains legal according to IRS regulations. Furthermore, your credit score will not be an issue since there will be no credit verification processes either and there is no need for you to put collateral in order to secure the loan. This of course implies that you will be able to obtain the funds that you need without hassles or delays and that you will not be risking your personal assets in the process.
If a small business had an application for credit refused by a financial institution, they will have a second chance to access credit by appealing to the government.