New research commissioned by business lending platform Lend.com.au has revealed businesses lack confidence in the lenders’ capacity to approve and settle loans under the Coronavirus SME Guarantee Scheme in a time frame that guarantees their survival.
Four in five business owners (79 per cent) cast doubt over the ability of banks to deliver loans in time, while just one in three said they believe the non-banks will approve loans faster.
The findings come from a survey of an independent panel of 207 business owners that sought to gauge the level of confidence among businesses in lenders who have been approved to offer the government’s Coronavirus SME Guarantee Scheme, and who are receiving the RBA’s facility of low-rate loans during the pandemic.
From the survey, Lend.com.au also found that 70 per cent of business respondents need the loans to survive. Among these, 12 per cent admitted the timing was already too late for their business, and 32 per cent need a loan by the first week of May.
But while the Coronavirus SME Guarantee Scheme was announced on 22 March, ANZ, Bankwest, Bendigo and Adelaide Bank, and Suncorp are still in the process of finalising their loan details.
Bill Baker, CEO of Lend Capital, opined that while there is currently the very real issue of bottlenecks in loan approvals among banks, the biggest problem for borrowers is beyond that.
Mr Baker said: “There is no way that any business will know which lender will approve them — borrower credit risk differs between lenders, and each bank and non-bank has its own lending criteria.
“Without knowing which lender’s criteria matches their credit profile, a business will go through the time-consuming process of making an application with one lender, waiting weeks in the queue for the result, and approach another if they are not approved.
“They will be forced to continue shopping around between lenders in an effort to secure much-needed funding.”
Ultimately, he said, there is a lot of confusion among borrowers.
“Finding the right lender with the right product is the longest part of the approval process. Once a lender matches the customer profile to its lending criteria, the process is very straightforward.”
Overall, Mr Baker warned that beyond help offered through JobKeeper, businesses need immediate access to capital to cover a range of other costs.
“For businesses in certain sectors, delays in these loans may render the government’s JobKeeper wage subsidies ineffective for holding onto employees, as a large proportion needs to cover other significant costs to remain operable over the coming weeks.”