04 Jun 2012
A large proportion of small and medium business owners will likely tune in to the Reserve Bank’s official interest rate decision tomorrow with greater apprehension than the average homeowner.
More than one quarter (28%) use their home loan to finance their business activities in some way, according to recent MYOB research*. The usage varies widely between states, with Western Australians being the least likely to do so (20%) and Queenslanders the most likely (31%).
The research also found 22% of business owners place a lot of importance on the cash rate, 63% place some importance, and only 11% do not consider it important.
MYOB CEO Tim Reed says, “Unfortunately for property owners and business operators alike, the vast majority of lenders didn’t pass on last month’s cash rate cut in full. This was a double whammy for a large proportion of Australians.
“For many business owners, even those without commercial finance, an interest rate move doesn’t just affect their ability to repay the family home loan. For too many, home loan interest rate moves also affect their ability to keep their livelihood on an even keel.
“Business conditions are still sluggish and one quarter of SMEs expect their revenue to drop between March this year and March 2013. It would make a real emotional and financial difference to the public if the Reserve Bank dropped the cash rate again now and lenders followed suit with both home loan and business loan interest rates.”
The MYOB research explored the different methods business owners use to access their home loan to help fund their venture:
|Yes - by utilising line of credit on our loan||14%|
|Yes - by increasing the value/amount of our loan||5%|
|Yes - by redrawing against the amount already repaid on our loan||5%|
|Yes - by accessing the cash funds sitting in our loan/offset account||4%|
Only 13% expected their applications for additional business finance to increase between March 2012 and March 2013. 51% said it would remain steady, while 12% said they would decrease it, and 24% were unsure. These figures were gleaned before the Reserve Bank’s May 2012 cash rate drop.
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Manager - Public Relations, MYOB
02 9089 9068 / M: 0407 450 860 / email@example.com
Established in 1991, MYOB is now Australasia’s largest business management software provider. Its 50+ products and services have been employed by more than one million businesses in Australia and New Zealand. MYOB serves businesses of all ages, types and sizes, delivering solutions that simplify accounting, payroll, client management, websites and much more. With a network of more than 20,000 accountants and other professional partners, it provides the support and tools that help make business life easier. Today, MYOB is extending its solutions online and delivering innovation through cloud computing, enabling clients to make smarter connections with their business partners and customers: http://myob.com.au/smarterconnections.