video-banner
none

GOVERNMENT UNVEILS $2 BILLION BOOST FOR AUSTRALIA’S SMES

14-11-2018
by 
in 

Although Australia’s small and medium-sized businesses generate employment, drive innovation and boost competition, it has always been difficult for them to get credit finance from banks, especially in the past few months, due to the royal commission into financial services, stricter loan serviceability rules and weaker house prices.

Some employers have had to use personal credit cards or take out personal loans, use their homes as collateral or pay interest rates up to four percentage points higher than those for overdrafts for large businesses.

However, Federal Treasurer Josh Frydenberg has now announced a major new fund to provide more financial options for SMEs and heighten competition with the big four banks, which currently dominate the market. The Australian Business Securitisation Fund will invest up to $2 billion in packaged secured and unsecured small business loans from smaller banks and non-bank lenders.

The fund will not lend directly to businesses but will support commercial lenders to do so, applying existing regulations for lending standards. The government expects the fund to run for five to 10 years, and will review it after two years to decide if it should commit more than the initial $2 billion.

“We are determined to ensure that small business gets ready access to finance at the lowest possible cost,” Frydenberg said. “By disrupting the existing market with this new $2 billion fund, small business will get the support it needs.”

The government will also overhaul banking regulations to encourage banks and superannuation funds to put money into a “growth fund”, copying a fund in the UK that has grown to $2.7 billion. The Australian Business Growth Fund will invest in SMEs rather than offer loans. Several banks have expressed interest in the concept.

Prime Minister Scott Morrison is prioritising SMEs ahead of the federal election due next year, including improving dispute resolution with the Australian Taxation Office and helping small businesses to be paid faster by large customers.

Related news & editorials

  1. 01.08.2019
    01.08.2019
    by      In
    Australian manufacturing rallied in July, with the Ai Group’s Performance of Manufacturing Index edging back into positive territory at 51.3 points, following June’s mild contraction. The improved performance comes despite sharp falls in both sales and production, but backed by improvements in new... Read More
  2. 15.07.2019
    15.07.2019
    by      In
    A new report from the Committee for Economic Development of Australia (CEDA) concludes that immigration to Australia has not harmed the jobs and earnings of local workers. The report, “Effects of temporary migration”, examines the impact of immigration and recent trends in temporary migration... Read More
  3. 09.07.2019
    09.07.2019
    by      In
    New research from the University of South Australia suggests that companies prioritising the environment are the ones reaping the financial rewards, contrary to the common perception that many businesses put profit first and a healthy planet a distant second.
    The study analysed 24,393 diverse firms... Read More
  4. 02.07.2019
    02.07.2019
    by      In
    Numerous studies have suggested that background music in the workplace can be a contributor to improved productivity – whether in an office environment, in the warehouse or on the shop floor.
    However, playing recorded or broadcast music in the workplace requires licensing to comply with the... Read More