And the banks wonder why they cop so much criticism.

Over the last few weeks there has been a lot of anger and complaint thrown on the banks from both the Australian public and even political parties.

It comes after the big 4 banks decided to raise their lending rates above what the RBA had raised its official cash rate.

A couple of the banks said they had to do it because of increased funding costs and because mortgage rates had been subsidized by other borrowers, particularly small business customers. They said home loan borrowers were paying less than should and small business owners making up for it by pay more on their loans than they should.

Fair enough. Put the mortgage rates up higher and keep any small business loan rate rises to a minimum to bring back the balance.

Sensible. We can all some sense in that.

So imagine my surprise when the Big 4 banks raised small business loan rates by the same amount as the home loan increase.

They wonder why we get narky.

The banks raised the small business lending rates as well, in some cases up to 45 points - double what the RBA had raised their official rate by. They say it’s a consequence of rising costs of lending to small businesses and the increased risk of lending to SMEs.

This is rubbish.

In their last round of profit reports, all the major banks cut back their provisions for bad debts because their business customers were doing a lot better than they expected.

In other words, the banks were admitting their small business customers were in a much healthier position than the bank had predicted.

After a year of record profits there is no better time for the banks to show their support for SMEs by keeping interest rates increases to a minimum. Small businesses are bearing the cost of the banks’ new strategy of increased personal mortgage lending. And, of course, they have their shareholders in mind who demand big dividends.

The minutes of the RBAs meeting in which they announced the rate hike shows that they’d even anticipated the banks would do this and incorporated that into their decision.

This is having a devastating effect on a lot of small businesses around the country. The ACCI has found the gap in performance between large and small business has never been greater. Research by MYOB shows that 1 in 3 small businesses were already feel extreme pressure from interest rates, and that was at the end of October, even before they were hit with this new rate rise.

Small businesses in Australia which combine business and home loans will be the hardest hit. The decision will hurt small business in two ways; the increased interest payments and in even greater restriction to financing.

So what can SMEs do about it? Over the last few weeks I’ve been telling individuals ways they can fight back at the bank. Well the same rules apply for small businesses.

Firstly, get all your statements together for all the products you have with your bank, and add up all the bank fees and premiums charged, plus the increased interest payments. You want to have an idea from the outset of the extent to which your bank is hurting your business.

Next, do some research. Just like with any consumer purchase, shop around and find the best deals. Not all banks will offer the same terms, rates and costs, so look around and find which one can offer you the best agreement.

Armed with this new information, go to your bank and demand a better deal. Show them how much your costs have increased, what a good customer you are, and tell them you’re happy to move on to another bank unless you are happy with your banking deal. Banks know it’s better to keep a good customer than find a new one.

Don’t be scared to get out there and actually sit down to talk with some other institutions. They should be trying to win you over to them, so be confident.

At the end of it all, if your bank won’t budge and won’t reasonable, it’s time to make a big decision, to switch institutions. Don’t be scared though, it’s something which is not done nearly enough and that’s why the banks feel they have the power to rip us off like this.

If you’ve done your homework, know your options, then back yourself.

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