Invest
How the credit crunch is impacting Australians
The fallout from the banking royal commission and tight standards from the regulators is continuing, and now it’s our most productive group of workers that are feeling the pinch.
How the credit crunch is impacting Australians
The fallout from the banking royal commission and tight standards from the regulators is continuing, and now it’s our most productive group of workers that are feeling the pinch.
Research from software provider MYOB suggests that nearly half of Gen Y small businesses have applied for finances last year, with 39 per cent of applicants being declined for a loan.
MYOB’s CEO, Tim Reed, believes the rate of successful finance applications for Gen Y businesses shows the flow-on effects of the Hayne commission into the banks.
“Recent data from the Reserve Bank of Australia demonstrates growth in bank loans of between $100,000 and $500,000 has been negative for the last three quarters, which further compacts the frustrations of small business operators,” said Mr Reed.
Mr Reed also believes a lack of competition has forced younger Australians’ businesses to stagnate as they are unable to get capital.
“This isn’t something you can pin on smashed avo. Australia’s youngest small-business owners struggle to get access to finance because they’re less likely to own their own home. Many of us have believed tying business loans to home ownership has been a problem with the lending system that has existed for years, but for the first time we’re now seeing the generational impact,” said Mr Reed.
With this, MYOB believes the system as a whole needs to be overhauled, with an increase in competition helping to support Australian businesses.
“For too long, there has been a lack of competition in the small-business lending market, which has led to a lack of product innovation. Small business shouldn’t have to put up their own property as collateral to drive their business forward. We believe the birth of a new generation of small business financiers, as well as the bipartisan support for the federal government’s Australian [Business] Securitisation Fund, is in response to this market need,” said Mr Reed.
Feeling lucky
Despite struggling to access credit, Gen Y small businesses maintain a positive view, with 31 per cent believing the economy will improve in the next 12 months.
Overall, 45 per cent of business owners believe that the economy will decline, according to MYOB survey data.
When asked about revenue, 28 per cent believe it’s due to increase in customers, followed by economic climate and a better relationship with customers tying for second at 14 per cent.
When it comes to profitability, on paper, 30 per cent of businesses increased, with 34 per cent of MYOB respondents believing they will have greater profits in the year to come.
“It’s interesting to see that the economy has worked in favour for some in the last 12 months, but most feel it’s been the reason for a decline if that’s what they’ve experienced,” said Mr Reed.
“An election environment tends to create instability for small business; they want to get to a point of certainty with policy settings so they can plan. An election outcome will always bring a sigh of relief, regardless of outcome, as expectations for the next three years become clear,” said Mr Reed.
This email address is being protected from spambots. You need JavaScript enabled to view it.
About the author
About the author
Stock market
Ethical investing tipped to drive ETF market
Following a volatile 2020 where investors poured into ETFs, shareholders are tipped to focus on ethical investing and technology as the recovery from the COVID-19 pandemic continues, an industry expe...Read more
Stock market
‘The concept of collective investing is here to stay’
The phenomenon of retail investors acting as a collective, led by social media and celebrity investors, is here to stay, says one expert. ...Read more
Stock market
What is short selling and should you do it?
Short selling stocks may sound like a good investment strategy when you’re after quick and big returns, but is it worth the risk? Here’s a rundown of why shorting stocks may not be a sound stock t...Read more
Stock market
How much insider trading really happens?
There are at least four times as many people who get away with insider trading than the number of those caught by prosecutors, new research has revealed. ...Read more
Stock market
Why you should be wary of the tech stock bandwagon
After a strong year of tech stock gains, tech shares have been on a decline in recent weeks as increasing bond yields rattle equity markets. ...Read more
Stock market
GameStop set to release first earnings since Reddit stock market rally
The video game retailer at the centre of the WallStreetBets saga is set to post its first quarterly market update since the fiasco began, with social-media investors heavily tipped to continue backing...Read more
Stock market
What is thematic investing and why it could be a fad
Long-term investors are being urged to ignore market fads and instead focus on identifying major socioeconomic, environmental and technological themes, an industry expert has explained. ...Read more
Stock market
ASX 300 companies cash in on JobKeeper scheme
Most of Australia’s ASX 300 companies that received JobKeeper payments did not need the subsidy as they recorded increases in profits throughout the calendar year, according to a study. ...Read more
Is the market overheating; should ETFs take your fancy, and what’s happening to the low and middle income tax offset?
Listen now
Home values up 30% (or are they); NFTs taking the world by storm, and why Keating thinks Aussies will be ‘poor’ in retirement
Listen now
Raging floods, the tech stock bubble and the ongoing SG debate
Listen now
Meet the Manager with Trilogy’s Philip Ryan: RBA rates and property price growth
Listen now
Stock market
Ethical investing tipped to drive ETF market
Following a volatile 2020 where investors poured into ETFs, shareholders are tipped to focus on ethical investing and technology as the recovery from the COVID-19 pandemic continues, an industry expe...Read more
Stock market
‘The concept of collective investing is here to stay’
The phenomenon of retail investors acting as a collective, led by social media and celebrity investors, is here to stay, says one expert. ...Read more
Stock market
What is short selling and should you do it?
Short selling stocks may sound like a good investment strategy when you’re after quick and big returns, but is it worth the risk? Here’s a rundown of why shorting stocks may not be a sound stock t...Read more
Stock market
How much insider trading really happens?
There are at least four times as many people who get away with insider trading than the number of those caught by prosecutors, new research has revealed. ...Read more
Stock market
Why you should be wary of the tech stock bandwagon
After a strong year of tech stock gains, tech shares have been on a decline in recent weeks as increasing bond yields rattle equity markets. ...Read more
Stock market
GameStop set to release first earnings since Reddit stock market rally
The video game retailer at the centre of the WallStreetBets saga is set to post its first quarterly market update since the fiasco began, with social-media investors heavily tipped to continue backing...Read more
Stock market
What is thematic investing and why it could be a fad
Long-term investors are being urged to ignore market fads and instead focus on identifying major socioeconomic, environmental and technological themes, an industry expert has explained. ...Read more
Stock market
ASX 300 companies cash in on JobKeeper scheme
Most of Australia’s ASX 300 companies that received JobKeeper payments did not need the subsidy as they recorded increases in profits throughout the calendar year, according to a study. ...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
