New data from the Australian Banking Association shows that $41 billion in loans to small and medium businesses have been approved since early 2020.
With around 70 per cent of loan applications going through, ABA chief executive Anna Bligh said approval rates for SME (Small/Medium Entity) loans have remained high through the COVID-19 crisis.
The flow of credit has remained strong since February, with 128,000 new loans to small and medium businesses and sole traders approved by banks over the past 250 days.
The average loan size is $320,000.
This has delivered on Treasurer Josh Frydenberg’s promise in mid-September that it will be easier for small businesses to get bigger loans from banks under changes to responsible lending rules designed to both make it easier to apply for a business loan, as well as increase access to finance amid the COVID-19 pandemic.
Total lending approved to businesses of all sizes is now more than $200 billion since February, according to the ABA.
“Australia’s banks remain open for business for small-business customers,” Ms Bligh told Accountant’s Daily.
“The banks’ commitment to small business has been supported by a number of government and regulatory measures,” Bligh noted, listing the RBA’s Term Funding Facility, changes to business lending rules, the instant asset write-off and the SME loan guarantee, which is supporting up to $40 billion of lending to SMEs (including sole traders and not-for-profits) by guaranteeing 50 per cent of new loans issued by participating lenders to SMEs.
Bligh is confident in the success of the measures.
“These small businesses will drive Australia through the crisis, and after it has passed, employ millions of Australians as the economy rebuilds.”