Ecolease Industry News
Once a month, Ecolease is going to share some helpful tips, tricks, and trends in equipment finance. We want to help give some insight into some of the benefits: demystify the processes and share some of what we have to offer. So please have a read and get in contact with us to find out more.
Banking Royal Commission Update.
If any of you have been following the banking royal commission over the past few months, it may not have been obvious, that regarding small business lending, the findings were mostly positive. I must say, I was not only relieved but agree with the findings, based on my experience over the past 16 years in commercial equipment financing.
Why are we relieved?
If you have been in small business long enough, you would appreciate that access to finance has never been that easy, pre GFC (Global Financial Crisis), post GFC and anytime in between! Certainly, the GFC brought with it a raft of new regulations and red tape, predominantly around the consumer finance space (such as Home Loans and Personal loans). These regulations were important to protect consumers from irresponsible lending practices.
The big concern for those of us that work in small business lending was that the rules applying to consumer loans would be extended to include small business loans. This would be disastrous! Not only would it become a nightmare to get a loan and, in many cases potentially impossible, it would also become more expensive.
Thankfully Senior Counsel assisting Michael Hodge QC recognised in his address to the Royal Commission, that lending to small business is far more complex and ambiguous than consumer lending.
Lending to small business works in the realm of “grey” rather than “black and white”, and the last thing we want is lenders reviewing small business loan applications from the latter perspective.
Fortunately, the commission found that the banks were no more responsible for small business failures than a shopping centre renovation or a global economic down turn. Mr Hodge stated that “it is not necessary or desirable to increase the obligations of banks making small business loans”.
Big sigh of relief…..
The complexity of lending is the key here, and this is why dealing with a broker, a trusted accountant or banker who knows your business, is crucial. Sometimes it is not just about the lowest rate on the table, but access to finance how and when you need it.