House price falls could spill over into small business, financial regulators warn

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Around half the outstanding small business loans are secured by residential property, and that could be a problem if house prices keep falling.

Falling house prices could spill over into small business lending, squeezing already tight credit conditions and their ability to raise much needed cash, according to Australia's top financial regulators.

Roughly half the $220 billion of small business loans currently outstanding are secured against houses and apartments. "For many small businesses, personal and business finances are intermingled. As a consequence, the higher standards that lenders apply to personal borrowing are affecting some small business loan applications," the Council's statement said.

 

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