Credit freeze sends a chill up small printers

Tighter credit availability set to affect small-sized print businesses.

According to the Australian Chamber of Commerce and Industry, ongoing turmoil in the global financial system and strains in credit markets have led to a reduction in lending to small businesses.

“Responses across our membership have confirmed that it is becoming more difficult to access credit for working capital requirements and capital expansion plants such as purchasing new plant and equipment,” said acting chief executive, Greg Evans.

“Both long established businesses and proposals for greenfields investment are being affected.”

Printing companies are not immune either, according to Wade Oldham, director of Oldham Finance. He believes that the selection process is now even tougher than ever.

“There is plenty of money around, but it is more a question of whether you are going to get it or not,” he said.

And while many printers enjoyed a reasonable 2008 financial year, Oldham believes that it will be the figures from post-June 2009 which determine who gets the money.

Hagop Tchamkertenian, Printing Industries national manager for policy and government affairs, found that based on the preliminary results from the December 2008 quarter Printing Industry Trends Report, finance availability was reported to have deteriorated once again for the fourth consecutive quarter resulting in the worst net balance outcome for this indicator since March quarter 1990.

Hagop believes that the finance sector has thrown a blanket on the printing industry refusing to extend credit to it in these uncertain times. “Ultimately a sound case needs to be associated with the application for new credit,” he said.

Receiving capital to invest in new equipment is also difficult, Oldham added.
“The number of equipment finance lenders has retracted substantially in the last four-to-five months,” he said. “The market has shrunk and there isn’t the competitive power to go from one lender to another.”

Oldham estimated that it could be another year until credit becomes widely available.

“The worst-case scenario is that it could be mid-2010 before funds are free-flowing,” he said.