Boutique buyer advocate Radar Results has reported that financial planning firms are on average waiting four to five times longer for loans to be approved than 12 months ago.
“Finance is becoming harder for financial planning firms to obtain, with waiting times for loan approvals taking on average four to five months in comparison to roughly four weeks this time last year,” Radar Results principal John Birt told InvestorDaily.
“Currently, about 50 per cent of our clients are waiting for loan approvals from banks, with 20 per cent having applications knocked back, which was just unheard of 12 months ago.”
According to the banks Radar Results had been in discussions with, one said they couldn’t afford to finance a particular firm as the bank had limited access to borrowing overseas money since the global financial crisis, while another said current clients were prioritised over new clients, Birt said.
Kenyon Prendeville director Alan Kenyon told InvestorDaily that he too had noticed that loan approval times had increased, but only by about a month.
“Saying that, however, loan approval timeframes have improved a lot since late last year and earlier this year and from what I’ve seen recently are slowly returning to normal,” Kenyon said.
While a lot of banks had made their approval criteria more stringent since the global financial crisis, Kenyon said that in 80 per cent of cases the reason for the slowdown was in fact because businesses did not have current or up-to-date information and financials.
“About 20 per cent of the time, extra processing by the financiers has been the cause of the slowdown but in my experience it’s typically caused by firms that are not submitting the information these financiers need,” Kenyon said.
According to Kenyon Prendeville, banks that had teams dedicated to financial planning banking did turn around applications faster than banks that did not have specialist teams.
