More than a quarter of businesses that have applied for finance over the past three months have been knocked back, according to a new survey.
The latest Sensis Business Index shows that 13 per cent of businesses applied for finance in the June quarter, down from 16 per cent in the March quarter.
The numbers were higher in the major cities. Twenty-two per cent of businesses in Melbourne applied for finance and 21 per cent in Sydney.
Of businesses that applied for finance in the quarter, 26 per cent were knocked back. The worst affected sector was transport and storage, where 60 per cent of applications were rejected.
In cultural and recreational services 56 per cent of applications were rejected and in health and community services 45 per cent were rejected.
Thirty-six per cent of businesses said it was more difficult to get finance since the pandemic started, while 51 said it was about the same and 12 per cent said it was easier.
On Friday, RBA governor Philip Lowe said “credit supply to small businesses is an issue. It's one that's been with us for years and years.
“At the moment, our sense from talking to the banks and even to some of the small business associations is that not many businesses want to borrow. They don't want to borrow because they're so uncertain about the future they're not investing.
“They are really in preservation mode. The Term Funding Facility is making a difference. It makes sure the banks have plenty of liquidity to provide the credit if they need to. I think that's working, but it's really the demand side that's the problem,” Lowe said.
“What we hear is that in the particular environment we're in at the moment the demand for credit is weak. It's not surprising. Why would you go and borrow at the moment, when there's so much uncertainty about the future?”