Are you ready for the Credit Crunch?



What has a credit crunch got to do with my business? What is the impact of the Royal Commission On my business?


Everything. Let me explain.


Although there may not be a direct link between the Royal Commission and lending practices to businesses there may be changes to lending requirements made by many very nervous Banks. When banks are nervous and restrict their lending practices, this has a direct impact on businesses who have lending facilities with banks. Its critical business owners are aware of and understand the consequences on their business.

The Royal Commission paper will be handed down next month. However, we are already seeing Banks tightening up and becoming more restrictive with their lending practices.

If there is a slow down as result of restrictive lending from the Banks this will have an impact both in terms of the economy slowing down as well as lending practices with the banks.


Already there have been criticisms made by treasury of banks when loaning funds to prospective home buyers. This further confirms the bank's concerns and changes to their lending policies.


Is all this bad news? No! More rigorous lending standards ensure that businesses may not be as financially compromised by taking on debt they may not be able to service. That is it is unsustainable. Ensuring that businesses are able to service the debt comes with welcome relief. By banks restricting lending, it eliminates further stress on businesses by in essence taking them an out of the loan market. Businesses will need to explore other options.


Practically you may be wondering what to do next? In the lead up to Christmas, I have met with a number of business owners who found it a very challenging time to meet their various financial commitments of the Christmas period. Christmas should be a time full of fun and jovial activities. However, for some business owners, it was overwhelming. They now return to a business that is going to be challenging. Not a good way to start the New Year.


One common theme I have noticed over the past six months is the lack of businesses who do not have a thorough understanding of their current finances. There is confusion on various fronts, including the link between the bank account balance and how much profit they make. Invariability they get caught out.


Call me today if you would like to discuss how in a short meeting we would be able to identify how to double your profits and go home smiling.




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