Banks tougher on business loans

Financial planners and other business borrowers from the major banks are paying more than their fair share of fees and charges, according to financial comparison website, RateCity.

According to RateCity, the latest Reserve Bank of Australia data points to banks collecting almost $7 billion in fees from business customers last year, with total business bank revenue increasing by 13.5 per cent to $6.9 billion.

RateCity chief executive Damian Smith said it was clearly much more expensive for businesses to get a loan from a bank than it was for households, and he questioned whether banks should be allowed to charge business customers more than personal customers if they were buying similar products.

He said that while business lending was seen as a bigger risk to banks than lending to personal customers because of income instability and the absence of security against assets, this was generally reflected in the interest rates ultimately charged – leaving a question mark over the level of fees.

Smith said banks’ lending criteria also needed more transparency for business financial products.

“It is harder to compare business loans than home loans because many lenders don’t display their products the same was as personal lending products,” he said.