Greater Bank increases its fees for business loans
It's the second bank this month to increase the cost of its commercial loans.
Greater Bank has announced an increase in fees across its three business loan products, becoming the second lender in recent weeks to increase the costs for business loan customers. Earlier this month, Suncorp announced it would increase its small business interest rates by 0.15% to 5.14%, accompanying a rate hike for its owner-occupied home loan rates.
The business loan cost increases come as a surprise in the current climate, with the business loans market being flooded with new entrants in the form of innovative fintech players and products.
Greater Bank business loan fee increases
| Fee | Current | New |
|---|---|---|
| Monthly Facility Fee - Business Line of Credit | $8 per month | $15 per month |
| Monthly Facility Fee - Business/Commercial other | $4 per month | $15 per month |
| Bank Guarantee Establishment Fee (individuals and companies) | $300 | $400 cash security$500 mortgage security |
New lenders are encouraged by fewer regulatory restrictions in the sector as well as reduced entry barriers regarding capital. In November, ABS statistics showed that the value of commercial finance commitments rose by 3.7% compared to the previous month following gains since September.
However, while alternative fintech lenders appear to be flourishing, banks have been put in the spotlight for their practices in regards to business lending. The Small Business Loans Inquiry, led by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) Kate Carnell in late November, saw each of the Big Four banks questioned over issues relating to loan sizes, unfair contract terms and the need for security despite the housing crisis.
As banks continue to increase business loan costs while alternative lenders and products enter the market, the effects for both lenders and borrowers remains to be seen.
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