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SME loan approval rate remains high through COVID crisis

Adrian Flores
Adrian Flores
20 October 2020 1 minute readShare
Anna Bligh

The approval rate for loans to small to medium businesses has remained strong through the coronavirus crisis, the Australian Banking Association has revealed.

The association revealed that since 1 February, approval rates for loans have remained high at around 70 per cent of loan applications received. 

In the six weeks up to 7 October, the ABA said the banks approved loans of more than $9 billion to small and medium businesses and sole traders.

It also said banks have been willing to lend to more than 128,000 Australian firms since the pandemic began, with an average loan size is $320,000.

Since 1 February, Australian banks have approved over $41 billion for SMEs and sole traders at an average of $5 billion per month. 

The ABA noted that, on average, banks have approved more than 500 new SME loans a day for more than 250 days.

In addition, total lending approved to all businesses, of any size, has totalled more than $200 billion since February.

ABA chief executive Anna Bligh said the clear message from this new data is that Australia’s banks remain open for business for small-business customers.

“The banks’ commitment to small business has been supported by a number of government and regulatory measures, including the RBA’s Term Funding Facility, changes to business lending rules, the instant asset write-off and the SME loan guarantee,” Ms Bligh said.

“Australian banks are continuing to provide a lifeline to small and medium businesses across the country. The rate of lending has held up strongly despite the pandemic.

“These small businesses will drive Australia through the crisis, and after it has passed, employ millions of Australians as the economy rebuilds.”

Earlier this month at MyBusiness Week, Australian Banking Association executive director of policy Aidan O’Shaughnessy conceded the federal government’s SME Guarantee Scheme was “a little bit before its time”.

Up to July 2020, only 15,600 businesses signed up to loans worth a combined $1.5 billion, compared with the scheme’s planned value of $40 billion.

The second phase of the scheme launched on 1 October and with slight difference compared with the scheme’s original phase which began on 23 March.

SME loan approval rate remains high through COVID crisis
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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