Westpac’s decision to pass on this week’s official interest rate to small business borrowers has been welcomed by small business industry groups, with the other big four banks urged to follow suit.
The Franchise Council of Australia (FCA), and the Council of Small Business of Australia (COSBOA) have welcomed the move, and have lobbied all the banks to do the same.
COSBOA chief executive Jaye Radisich said home loan rates had been reduced in the past 12 months, but there hasn’t been any “flow-on” for small businesses.
“Most small businesses don’t have the fat in their budgets that major corporations do. So every time there’s a change in interest rates or if their access to credit is denied or there’s other regulatory factors which affect them then they have to make serious decisions in terms of whether there has to be cutbacks in their own business.”
This follows news that NAB have refused to pass on interest rate cuts to consumers, keeping their standard variable mortgage interest rate at 5.74 percent, while official interest rates have dropped to as low as 3 percent.
In a meeting of banks and small business groups in Sydney yesterday, FCA executive director Steve Wright said that the general mood was “gloomy on the current state of funding costs and interest rates” adding that “this is a very positive sign of Westpac at least listening to the concerns of small business”.
The Commonwealth Bank of Australia have also opted to lower their interest rates by 10 basis points, following the RBA’s decision to lower the official cash rate on Tuesday.
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