Lenders still keen on SME business

AS the SME sector continues to claim the finance available to it is dwindling, Western Australia’s big banks have pledged their commitment to servicing small businesses, with both Commonwealth and NAB entering debate during the past week over which is more committed to business lending.

Commonwealth-owned Bankwest is the largest business banker in WA, with the highest number of business banking staff according to the WA Business News Book of Lists (see page 24).

NAB is now ranked second with 476 business banking staff, followed by Westpac and Commonwealth with 282 and 105 business banking staff respectively.

Bankwest managing director Jon Sutton told WA Business News the bank had a strong focus on business banking and planned to add 50 extra business banking staff to the current figure of 519 across the 136 Bankwest branches in WA within 12 months.

“We are definitely putting more bankers on the ground in WA, particularly with a focus on SMEs; we believe that is a market that is crying out for better personal service levels,” Mr Sutton said.

He said banks needed to employ different strategies and look beyond debtor finance in order to cater to the SME sector.

“We have been involved in debtor finance but what you need to look for as a SME customer is a whole range of options, debtor finance may suit certain customers but for others it may not suit because of the nature of the debtors they have,” Mr Sutton said.

“Really, where all banks need to go is to have a really good understanding of what those customers need, not flog a product but ensure there is a whole suite of financial services available that are right for that customer.

“There is quite a lot of discussion about the supply of credit and credit growth for small business ... the credit conditions within the market are benign at the moment still and actual credit growth across the business sector is still pretty soft.”

Smaller financiers ranking on the list were independent debtor financiers Bibby Financial Services, number 15 on the list, and Scottish Pacific Benchmark at 14.

Bibby’s national sales manager, Gary Green, told WA Business News that during the past 18 months he had seen an increase in the number of customers seeking debtor finance from non-banks.

“Nationally our book has grown by 40 per cent in the last 12 months, certainly what has been driving that is debtor finance in WA and Victoria,” Mr Green said.

“That has probably been driven by the banks being more conservative in their lending policies over that period which has opened up opportunities for alternative financiers.

“I think business has been frustrated that they don’t have the support of banks that they have been used to in the past. Banks have obviously been a big supporter of business in the past, they certainly have tightened up and been more conservative over the last 12-18 months. It has encouraged the businesses to look for alternatives.

“Half of our new clients are new to debtor finance, that tells a story they are looking for alternatives, and the other half are refinancers of existing banks clients. Where they have failed to get the continued support of their bank, they have come to us.”

One of Scottish Pacific Benchmark’s three WA business banking staff, Coral O’Neill, shared Mr Green’s views.

“In the last 18 months to two years, small to medium businesses are finding that banks aren’t willing to increase their facilities or lend really for new starts, even bigger companies that may not have considered debtor finance before have approached us,” Ms O’Neill said.