Australia has once again failed to participate in an international report on small business finance and this omission will cost small business.
The Organisation for Economic Development and Co-operation conducts a yearly report, Financing SMEs and Entrepreneurs 2013: An OECD Scoreboard, which looks at access to finance for small and medium-sized enterprises.
The report was published on Friday and found access to finance remains a key challenge for small and medium-sized enterprises and a stumbling block to recovery in most countries.
The report found SMEs requesting loans in 2011 generally faced higher interest rates than in 2009-2010 and credit conditions continued to be tougher for SMEs than for larger companies as small businesses faced shortened maturities and increased demands for collateral.
In a number of countries, the interest rate spread between SMEs and large firms grew in 2011.
The results of the OECD report make for a fascinating read as it provides a window into SME’s financing conditions using comparable indicators from countries around the world.
The countries covered in the report include: Canada, Chile, the Czech Republic, Denmark, Finland, France, Hungary, Ireland, Italy, Korea, the Netherlands, New Zealand, Norway, Portugal, Russia, Serbia, the Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Thailand, Turkey the UK, and the US.
These are countries Australia should be included alongside.
Participating in this report would assist with the design and evaluation of policies and monitor the implications of financial sector reforms on access to funding for small businesses.
At the moment, this is all happening in a vacuum without the benefit of all this helpful comparative data.
According to Gavan Ord, business policy adviser at CPA Australia, comparing lending trends among Australian SMEs over time and to those of SMEs in other countries is fundamental to the development of policies aimed at boosting the sector and there is a longstanding gap in data on SME lending in Australia.
Australia’s involvement in the OECD scorecard would help fill this gap in data and allow us to better compare trends in SME financing conditions over time and with other countries.
Australian policymakers appear to rely on loan data from the Reserve Bank of Australia, which delineates loans by size, with loans under $2 million assumed to be generally provided to small business.
Clearly this mechanism is flawed and better data is needed.
SMEs complain that banks are tightening up finance but, besides anecdotal comments, Australia is missing out on the empirical evidence which could help guide small business policy.
It’s a missed opportunity.