Zenith Finance Blog

August 2 2011 – RBA keeps interest rates at 4.75%

Despite the inflation rise at home, the Reserve Bank decided to keep interest rates at 4.75% when they got together yesterday for their August Pow Wow.

The main reason being a slow down in the growth of the global economy due to events such as the Japan earthquake and public finances of the US and Europe.

ANZ put a foot forward, with officials announcing the bank will lend $1 billion to new businesses over the next 12 months. Dangling money is one thing though – convincing small businesses that they’re in with a chance of securing a loan is another.

There is a “perception” that banks don’t loan to new businesses, says ANZ General Manager Small Business Banking, Nick Reade.

“A lot of new small business owners think that it’s only big businesses that get loans from the banks, but that’s not the case. In the last year, we approved more than seven out of every 10 lending applications from new small businesses,” he stated in a press release.

Whether this latest move changes that perception is yet to be seen.

In recent years banks have tried various ways to get the attention of small businesses – NAB with its TV advertisements; the Commonwealth Bank’s 24-hour phone line; Westpac announcing it had set aside $1 billion to “support the business sector”. It does seem however that the banks criteria for lending to a small business remain the same.

It’s useful to look at success stories of start ups that have raised money, not from banks but rather form investors. They provide ‘clues’ as to what investors want before investing in a start-up or emerging business.

When you actually drill down you find, in the main, people who have “been, there, done it” rather than raw start-ups. What successful start ups have done is demonstrate that a business case is bullet-proof.

Common mistakes new start-ups make include:

  • Not checking basics such as operating costs
  • Being competitive
  • Running lean; operating on a shoestring.

Want money for a car or truck or equipment? Get leasing finance. But need capital for launching a start up or expansion, then get a business plan.