Nab Lures Small Traders
The Age
Tuesday March 30, 1993
National Australia Bank has set its sights on the small-business market for the second time in a year, offering a cut-rate loan and interest rate ceiling to boost business lending.
NAB is offering to lend $50,000 to $5 million at 8.1 per cent, compared with its base business lending rate of 9.7 per cent. The loans will have a three-year ceiling of 9.6 per cent.
NAB, which has over the past decade built up strength as a retail bank, is using its superior balance sheet to move into small-business lending, where it has not previously been as strong.
The `Business Booster' program can also be expected to provide it with a marketing advantage, coming as it does on the heels of the Government's plea for banks to lend more to business.
Last year NAB also put pressure on its three big rivals by announcing it had set aside $1 billion to lend to small business, offering a two per cent discount on the assessed interest rate. That program was for loans of up to $10million, which included more medium-sized as well as small businesses.
Reserve Bank figures show that commercial lending has fallen away in recent years. The Government has been pressuring banks to lend more to business, but banks say there is inadequate demand.
NAB's chief general manager of Australian banking, Mr Allan Diplock, said the new loans would only be made for productive investment proposals, such as ``the purchase of plant or equipment, the construction or purchase of owner-occupied factories and other business premises, farm improvements, and the financing of increased inventories resulting from business expansion".
They will not cover existing loan refinancing, non-owner-occupied property purchases or sharemarket investments.
The loans have a three year interest rate ceiling, now at 9.6 per cent, and are for terms of three to 10 years. Applications must be made before 30 September.
About 95 per cent of Australia's 800,000 businesses are classified as small businesses.
The State Bank of NSW has launched a new business cheque account paying cash management rates of up to five per cent. The bank says the business account can be combined with its discounted variable rate term loan, which offers a discount on the bank's reference rate of one per cent a year for up to three years.
The loan product is aimed at small to medium-size businesses intending to expand or refinance, State Bank of NSW says.
© 1993 The Age