Banks pressure small business for deposits in exchange for loans

According to The Australian Financial Review, small businesses are sucking up interest losses on deposit in an effort to secure a loan. In an increasingly competitive market for deposits, banks are pressuring small business owners to switch over their deposit accounts to access loans.

Analysts estimate that some small businesses are losing 1% or more to make the transition.

"They are saying: 'If you want a loan then you will have to move your deposits to the bank', That's not necessarily in the best interest of the small business, but as they need the loans, that's what they decide to do," said Peter Drennan, financial markets analyst.

If you need a business loan and are having difficulty in securing a loan due to the bank's strict lending criteria, speak to the financial consultants at Intellichoice about alternative business finance solutions that don't tie you in with a bank. We have a variety of business finance solutions to help you grow your business, including invoice finance, trade finance, inventory finance and more.