13 April 2010
The Sydney Morning Herald
Editor - Letters to the editor page
Delivery by email: letters@smh.com.au

Dear Sir or Madam,

Re “Crackdown on small business” by Clancy Yeates, page 1, Business News

I would like to provide some context to my reported comments on banks and their small business customers in financial distress.

There is no doubt that small businesses have had a tough trading period throughout the global financial crisis and are still dealing with its impacts. Unfortunately some small businesses have experienced cash flow problems related to the economic downturn, and in some cases, this has affected their ability to repay their loans. Reserve Bank of Australia (RBA) data show that the 90 days + arrears measure for business loans remains at elevated levels.  It was at 4.15% at the end of 2009, which was nearly seven times higher than for home loans.

I noted at the Senate Committee hearing that some businesses who had been supported by banks throughout the crisis may not survive. However, my understanding is that this would be a small minority of businesses. The majority are now benefitting from the Australia’s growing economic recovery.
The failure of individual small businesses is not due to a ‘crackdown’ by banks, but the effect the recent economic downturn has had on their trading conditions.
 
Yours sincerely

_____________________________
Steven Münchenberg