The big four banks “couldn’t give a toss” about providing credit to new enterprises, federal Small Business Minister Brendan O’Connor has claimed.
Speaking at a discussion panel at Melbourne co-working space The Hub yesterday, O’Connor, who was appointed as small business minister in March, attacked the continued reluctance of Australia’s leading financial institutions to provide start-up funding to new ventures.
“Access to credit is a problem I hear time and time again from small businesses,” he said.
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“This just reaffirms to me that the larger financial institutions, the big four banks, in Australia couldn’t give a toss about small businesses’ access to credit.”
“They see it as higher risk and a greater cost to themselves. We see it time and again, through the different fees they charge small businesses and the different credit levels they provide.”
“If the banks don’t see a decent return, they don’t do it. We’ve met with (Westpac CEO) Gail Kelly and others to work out what they can do to open lines of credit, so hopefully something will come of that.”
“If someone can convince me of a way to help expand credit to small businesses, I’ll listen. If you can convince me, I’ll convince other ministers.”
O’Connor was responding to the story of Melbourne solar lighting business Illumination Headquarters, which explained to the minister that it failed to get funding from the banks despite having 80,000 in confirmed sales orders from official aid bodies in the UK, US and Japan, all because the founders lacked equity in their personal mortgages.
O’Connor was also candid about the failure of the main political parties to cater to the particular needs of innovative start-ups.
“I don’t think the two main political parties have had a full appreciation of small business before,” he said.
“The Liberals have had a few rhetorical flourishes, but then again they made small businesses unpaid paymasters by bringing in GST.”
“We’ve had an explosion in business atomisation in Australia, companies set up with two or three people, and we traditionally haven’t catered for them.”
“These businesses have done well without too much assistance, but our job is to create an environment that will help them thrive and grow further.”
This article first appeared on StartupSmart.