Small businesses in Australia can expect better lending conditions as the economy strengthens, the Reserve Bank says.
In a submission to a Senate inquiry into access to finance for small and medium-sized businesses, the Australian central bank says competitive pressures are beginning to intensify.
"Foreign-owned banks are also likely tolook to expand their presence in the market as global conditions continue to improve," it said.
This will be welcome news to small businesses that have argued they are getting a raw deal from the banks since the global financial crisis.
The central bank says higher funding costs and a reassessment of risk have resulted in an increase in the difference between lending rates on business loans and the cash rate.
Reduced lending by the smaller banks and non-bank financial institutions appears to have been the main factor in the easing in competition for small business loans.
In contrast, the major banks have continued to increase their lending over the past few years.
