James Thomson Editor

James Thomson is the editor of BRW. Previously he was editor and publisher of SmartCompany and a senior editor at Business Spectator. He writes regularly on Australia's wealthiest entrepreneurs and has deep expertise in small business and the mid market.

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ANZ pledges to lend $1 billion to start-ups over next 12 months

Published 09 April 2013 09:56, Updated 10 April 2013 07:42

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ANZ pledges to lend $1 billion to start-ups over next 12 months

Nick Reade says ANZ Bank is pledging to lend $1 billion to new businesses over the next year. Photo: Michele Mossop

ANZ Bank has fired the latest shot in the war for business customers, pledging to lend $1 billion to new businesses over the next year, increasing its annual lending to this sector by around 30 per cent.

ANZ’s general manager of small business banking, Nick Reade, says his bank’s campaign is part of a wider push to own the start-up end of the market.

Reade argues that there are only two types of business customer: new businesses and companies switching from another bank. Going after new business is also smart because business owners tend to stick with their bank for a long time.

But despite ANZ’s work in the start-up space, the bank says it needs to do more to get the message across to new business operators. Reade says already 20 per cent of its business loan book is from this end of the market, the bank is approving seven of 10 start-up loan applications, and start-up loan applications are up 30 per cent in the last year.

Recent research showed 40 per cent of new business owners believed credit was hard to get.

“There are lot of myths out there that banks don’t lend to new small businesses. ANZ certainly does. Not all banks do, but we certainly do,” Reade says.

“It is part of positioning ourselves as the banks for start-ups.”

With Australia’s banks facing a long period of low credit growth, the battle for the business customer has intensified in recent months.

Joseph Healy, head of business banking at National Australia Bank, told BRW while business confidence means demand for credit is low, the banks have the capacity to lend and are becoming more aggressive in their pursuit of the sector.

“We are certainly seeing the competition very aggressive on pricing, so we’ve seen margins come down from where they have been. And we’ve seen a relaxing of credit standards from one or two banks.”

Reade says ANZ is staying rigid on its credit standards, but it is prepared to lend across a “broad spectrum” of businesses.

He says start-ups looking for capital will need three things: a detailed business plan, a detailed cashflow forecast and a good credit history.

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