Small businesses will benefit from commitments by NAB to improve transparency and certainty on loans and to make contracts simpler and easier to understand.
NAB today announced financial indicator covenants will no longer be used in most loan contracts for new and existing small business customers with total business lending of less than $3 million.
The measures improve transparency and will give greater certainty to 98% of NAB business customers who fall under this threshold.
NAB has also committed to overhauling small business contracts by the end of the year, to ensure they are written in plain English and far simpler for customers.
NAB Executive General Manager Business Direct and Small Business Leigh O’Neill said the commitments reflect NAB’s efforts to lift standards across the industry and is an important part of the bank’s focus on putting the customer first.
“We’ve been working constructively with the industry to address concerns raised in the Small Business and Family Enterprise Ombudsman Kate Carnell’s Small Business Loans Inquiry report. We are proud to be helping lead the charge on this – including taking measures beyond the Ombudsman’s recommendation, by applying the measures to all new and existing loans,” she said.
Ms O’Neill said $3 million is the right threshold as it benefits 98% of customer loans while customers with loans above $3 million are more complex and require a greater level of management.
“Small business is the engine room of our economy and NAB is committed to supporting the sector through simplification measures,” Ms O’Neill said.
“Ensuring our customers are feeling supported just makes good business sense.”
NAB’s additional commitment to simplify small business contracts follows a recommendation by the Ombudsman to implement a new small business standard form contract written in plain English.
“Our customers want to deal with us in a simpler and more connected way and we are making that happen,” Ms O’Neill said.
Ms O’Neill also reiterated NAB’s call for a single national definition for small business to be established.
“There are currently multiple definitions in use across the industry and this only adds to the frustration for our small business customers. We are calling on all levels of government and the business community to take action on establishing a single, clear definition for small businesses.
“It is simply not good enough that a small business has to deal with multiple levels of red tape because bureaucracy can’t settle on what constitutes a small business and we want to advocate for our businesses so their life is easier.”