“What did surprise the WHK team was that half of the surveyed businesses are not seeking to increase borrowings and over two thirds aren’t hiring. These are certainly worrying times for business owners” said John Lombard, CEO & Managing Director WHK Group.

“The other surprise was the low level of understanding of how a carbon tax impacts on their business with a whopping 83% expressing a lack of understanding around the tax. Further, 73% believed that a carbon tax would have a negative impact on their business profits. It seems hard to see a positive anywhere at the moment for SME’s” said John Lombard, CEO & Managing Director, WHK Group.  

                                                
Bright light:  First time in 12 months, indications of decreasing interest rates for SMEs
There is a continuation of repricing loan facilities across the sector with a third experiencing a repricing upwards on their debt.  One bright light was that we had a small spike, with 7.2% experiencing a downward repricing (up from 2-3% over the past 12 months).

“While we only have anecdotal evidence to rely on from the survey, it seems that there is a new-found level of branch manager discretion and a willingness to not see the SME sector as a one-size-fits-all model by the banks.

“This could be a sea change for SMEs in their relationships with their banks. The swings in repricing, in both directions, indicate that there is more discretion on a case-by-case basis in looking at the creditworthiness for these smaller businesses.

“It might be worthwhile for SMEs approaching a bank review to work with their accountants and advisers to show their performance in the best light. This could either limit the higher repricing of credit or to better benefit from a downwards repricing on the cost of their debt.

“If businesses aren’t prepared, an increase in credit costs could very well push those small businesses under.  They are already experiencing higher costs for money and jolt of this magnitude may simply be too much,” said Mr Lombard.

Hiring: Forget about Christmas jobs coming from small business
With the Australian economy experiencing low unemployment numbers, the survey finding that two thirds are not going to hire new people is quite alarming.  This is regardless of seasonal factors like the run-up to Christmas or the post-Christmas lull for retail. These businesses are simply not hiring. “The survey respondents made comment about being hesitant to hire full-time staff. Their preference was for contractors and/or permanent part-time engagement. 

“The other point made by these small-business employers is that more onerous employment laws make full-time hiring less attractive.  The respondents believed that they did not have the resources of a big employer with an HR department to handle all of the issues around hiring/firing staff,” said Mr Lombard.

Carbon confusion
“These results question the success of the current education campaign re. introduction of a carbon tax. With 82.6% of respondents not understanding the effect of this tax on their business, it is hard to see what message has been understood. These business owners are a long way from understanding the impact of this tax,” said Mr Lombard.
Even thought the carbon tax was not understood, there was a clear belief by 73% of those surveyed that their business profit would decrease.

Global worries effect half of all respondents
Even though only 17% of SMEs are directly involved in import or export, just over half of all surveyed believe that the poor state of the global economy would impact their business sales.

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