Lenders are sidestepping trucking companies in search of finance, with the industry considered "high risk"
By Michael House
Lenders are
sidestepping trucking companies in search of finance, with the industry considered “high risk”, according to one finance broker.
Pearl Finance General Manager Nathan Keating confirms major lenders across Australian have ceased lending to transport companies. But fleet owners are not alone.
“What we are seeing is that banks do have a problem with the transport industry, in fact they have a problem with most industries currently,” he says.
“The problem is a simple one to explain: they don’t want to lend to businesses where there is a high risk of that business not being able to service their debts.
“In the current environment banks are viewing every loan application from a starting point that the business is unlikely to be able to sustain adequate servicing capability and it is up to the applicant to then convince them [banks] otherwise.”
Banks are witnessing a reduction in demand for transport services and a margin squeeze on smaller operators in particular, according to Keating.
“This will be tarnishing their view of the whole industry,” he says.
Keating says the emphasis is now on borrowers, more than ever, to convince the banks to give them the cash they need to expand.
He says companies need to hold on to existing long-term contracts with clients who guarantee purchase for the foreseeable future, prove the longevity of business operation which demonstrates ongoing customer satisfaction and provide demonstration of hard working directors and shareholders who are intent on business success in order to up the chance of finance.
“Banks are still lending to businesses where they can adequately cover off this concern but the businesses receiving the finance are needing to work very hard to help the bankers see the positives in the proposition,” he says.
Are you finding it difficult to secure finance? How has your relationship with lenders changed? We want to hear your thoughts for a wide-ranging feature on truck financing amid the economic downturn. Contact Michael House on (07) 3166 2316.