Small Business

Support innovation by cutting rates

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While it’s unlikely the Reserve Bank will reduce the cash rate at tomorrow’s meeting, given Governor Glenn Steven’s previous statements that the central bank is comfortable with their position, MYOB is calling for a cut to support SME innovation amid turbulent business conditions.

According to the latest MYOB Business Monitor research, a key priority for SMEs in 2012 is innovation through diversification, with one-third of respondents saying they plan to introduce new products or extend business activity into new regions this year.

“A solid reduction in the cash rate – if passed on by lenders – will visibly impact these important GDP contributors,” says MYOB CEO Tim Reed. “They will have more confidence to follow their desire to broaden product sets and explore new markets, bolstering their ability to compete globally.”

Reed also notes the sector needs strong leadership from the new Small Business Minister Brendan O’Connor – his recent appointment marks the fourth Small Business Minister appointment in five years.

“SMEs are facing a number of headwinds this year and are looking for clear recognition, guidance and support. We are concerned that the small business portfolio is not being given the serious attention it deserves. It accounts for 96 per cent of Australian businesses; this is far too large a segment to ignore.”

Of the top three pain points identified by SMEs, interest rates was a key concern, among fuel prices and profitability.

“Business loan demand, including overdrafts, saw strong growth in Q4 last year, up 10.5 per cent on the prior year,” says Reed. “Additionally, close to half of commercial credit inquiries came from SMEs. These businesses are already facing enough challenges without interest rates placing further pressure.”

The responsibility to ensure lenders pass on rate reductions is in the Government’s camp, says Reed.

“The Government has a role to play here in working to increase competition in the business finance market and stir lenders into presenting better deals to their SME customers,” he says.

If you’re looking to work on your business rather than being stuck in it, book in for a complimentary business assessment today with Switzer Business Coaching.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Tuesday, March 06, 2012

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