One in three Australian small to medium businesses felt significant heat from rising interest rates in the three months to the end of October, a new survey by business software provider MYOB shows.
The quarterly MYOB Business Monitor, which surveyed 1000 businesses around Australia, showed rural businesses were experiencing the toughest times, with one in 10 reporting extreme pressure due to interest rate hikes, and 42 per cent suffering significant pressure.
In regional Australia, 6 per cent of businesses were feeling extreme pressure, compared to 8 per cent of city operators. Twenty-eight per cent of regional and city operators reported significant pressure due to rates.
The results came before the big four banks' latest hefty interest rate rises this month.
MYOB chief executive Tim Reed said while much of the attention on rate rises had focused on household mortgages, the survey results showed business owners were "really struggling to make ends meet".
Sectors facing the most stress were finance and insurance, agriculture and manufacturing and wholesale.
Mr Reed called on the Reserve Bank and the big four banks to recognise that SMEs "are the lifeblood of the recovering economy" and that rate rises were hitting them hard.
He said that "the ripple effect on mum and dad businesses struggling to repay loans and seeing customers spending less will mean less jobs, less investment and a greater likelihood of the Australian economy going backwards".
Of the businesses surveyed, 12 per cent had seen revenues decline since August.
Queensland operators had the least positive outlook, with 38 per cent expecting their business to experience significant pressure in the next year because of interest rates, followed by South Australia at 33 per cent.
The survey also showed that established businesses of 10 years or more were the most strained, followed by those operating between two to five years and start-ups.
Meanwhile, a survey released today by the Australian Chamber of Commerce and Industry (ACCI) showed small business performance was lagging behind its larger counterparts.
"Small business sentiment and operating conditions have retreated to the levels not experienced since the December quarter of 2009, amidst the prospect of rising interest rates and uncertainty about the strength of the global economy," ACCI director of economics and industry policy Greg Evans said.
"Continued weakness in sales and selling prices, coupled with the rising cost of labour and finance, has put a significant squeeze on small business profitability and is limiting small business' ability to employ and undertake investment."
