The big banks in Australia – the Big Four – failed the SME’s. Bigtime.
Small and medium enterprises in Australia are the engine room of its economy. SME’s roughly employ 4.7 million people, producing one-third of the total GDP. It is an undeniable force that pushes the economy forward. Yet big banks have not supported SME’s much. In fact, the big banks have made it difficult for SME’s to borrow money despite being able to afford to roll out the loans. Apparently, SME’s proud history of boldly accelerating the economy doesn’t mean a thing to these big banking institutions.
When the big bank’s dirty laundry was exposed, instead of wooing SME’s, they ran in the opposite direction. The big banks tightened the noose some more by requiring extensive proof of income and creditworthiness. They have also squeezed the determinants in an SME’s borrowing capacity reducing available credit. SME’s in Australia find themselves in jeopardy of being shut down
These are the biggest banks in Australia, and they’re called the Big Four – Westpac Banking Corporation, National Australia Bank or NAB, Commonwealth Bank of Australia and Australia and New Zealand Banking Group. They hold the majority of all loans from mortgage borrowers as well as by the value of their total assets.
So now the question that begs to be asked:
The Great Recession: Its Effects on the Financial Market
Major bank corporations are under threat with the emergence of a hot, new alternative in the lending industry—non-banks. Back in 2007-08, more than a decade ago, major bank corporations suffered a huge blow in what is now known as the Global Financial Crisis. According to economists, the impact of the crisis is similar to the Great Depression of the 1930s. During this time, we witnessed the collapse of Lehman Brothers, one of the five largest banks in the US that relied on short-term financial sources to stay afloat until it eventually declared bankruptcy.
Australian banks and large mortgage firms have seen a pronounced decline in borrowing over the past year. Stricter regulations redefined the post-financial crisis landscape, traditional banks have cut back on loans increasing rejection rates. The result? A significant number of borrowers are now working with private lending sources. No B*nk is such a financial source.
Paul Boyd Skinner, Managing Director of No B*nk has spent his career over the last 16 years helping thousands of people and businesses secure non-bank lending.