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. 14.06.2019
    14.06.2019
    by      In
    The University of Western Australia and its partner organisations will receive $67.5 million in overall funding for world-class equipment to advance scientific research in Western Australia and support WA jobs in STEM industries.
    The State Government has committed $10.5 million over the next three... Read More
  2. 11.06.2019
    11.06.2019
    by      In
    New data from the Australian Bureau of Statistics confirm that manufacturing employment is on the rise again. Although the total number of filled jobs in the sector declined from 900,000 in March 2014 to 880,000 in March 2019, the recent trend has been upwards and accelerating, with the total... Read More
  3. 04.06.2019
    04.06.2019
    by      In
    A novel Silicon Valley financial technology product has been launched in Australia following huge success in the USA. PayActiv is a mobile app based “financial wellness” product that gives employees immediate access to earned-but-unpaid wages, helping them to avoid financial stress.
    Working on the... Read More
  4. 03.06.2019
    03.06.2019
    by      In
    The uncertainty factor of the now decided federal election cast a damper on Australian manufacturing during May, with the Ai Group Performance of Manufacturing Index dropping from April’s high of 54.8 to 52.7 points in May, indicating that the rate of growth has slowed.
    Nonetheless, growth it still... Read More