Recent headlines: Banks too scared to lend to business! Banks apply tougher lending standards and higher interest rates to smaller companies! Business cash-flow lending replaced by mortgage-backed lending!
Prior to the onset of the global financial crisis, banks were falling over themselves to lend to business. Now they want investigating accountant’s reports, tougher covenants and charge much higher risk premiums.
Today, small and medium-sized businesses are bearing the brunt of tighter credit. They are paying higher interest rates and being shut out of obtaining working capital for new ventures despite the improving economic outlook. Banks are charging smaller businesses almost double the margin the large businesses pay over the official cash rate, and well over double the margin charged to home borrowers.
Debt funding for many businesses is now completely out of contention.
Now is a good time for directors to consider strengthening their balance sheet by raising equity capital.
If you need funding to develop or expand your business, forget the banks, contact us today.
