REPORT: Small business in Australia 2021
25 November 2021
The Australian Banking Association (ABA) has today released its 2021 SME Lending Report, highlighting how important Australian Small and Medium Enterprises (SMEs) are to the country’s economic recovery.
The report was released to coincide with the inaugural Small Business Roundtable, a new bi-annual event attended by member banks and key industry bodies including the Council of Small Business Organisations Australia (COSBOA) and the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).
ABA Chief Executive Officer, Anna Bligh said the establishment of the Roundtable was timely.
“Partnering with small business is one of the most important roles a bank can play. Now is the right time for us to come together to have a shared sense of purpose in support of the nation’s economic recovery, with a particular focus on small business,” Ms Bligh said.
“The small business sector is already powering Australia’s economic recovery. In the three months to August 2021, $10 billion in new lending was made to small business.”ABA CEO Anna Bligh
“The SME Report provides a snapshot of the current economic position of the small business sector in Australia, an industry which can be further strengthened with the support of banks, stakeholders and governments.
“The small business sector is already powering Australia’s economic recovery. In the three months to August 2021, $10 billion in new lending was made to small business, a 26% jump from $7.9 billion in the three months to August 2020.
“Heading into 2022, we expect small businesses to further re-emerge from a hibernating economy and banks are here to support them,” she said.
Key highlights of the SME Report include:
- SME lending: Interest rates for loans to all business sizes are at record lows while there has been a recent uptick in new business loan commitments, with $17 billion lent to SMEs in June 2021, the highest amount on record
- Appetite for borrowing: Demand for borrowing by SMEs remained subdued throughout 2020 and 2021 with fewer than 15% of SMEs seeking finance, however the majority of those that applied for a loan were approved. Looking forward, only 4% of SMEs reported an intention to borrow more in the coming 12 months.
- Digital transformation: The number of businesses that received orders via the internet grew from 41% to 50% between 2018-19 and 2019-20. Online orders were less common in micro and small businesses (45% accepted online orders) compared with medium businesses (57%) and large businesses (60%).
The Small Business report will be shared with governments and relevant stakeholders as the banking industry continues to deliver innovative products and services to customers.
Banks worked with government throughout the pandemic to support initiatives such as the instant asset write-off, SME Loan Recovery Scheme and the Show Starter Loans.
“Australia has witnessed a phenomenal shift in customer banking and payment preferences in recent years,” ABA CEO Anna Bligh said.
The RBA continues to address the nation’s inflation challenge with today’s 0.25% increase in the cash rate target, to 4.10%.
Australian banks today launched a new digital platform that will facilitate the quick reporting of fraudulent payments en route or transferred to another bank.