At a time when continued growth of Australian small businesses was being threatened by the banks tightening access to credit in the wake of the Hayne Royal Commission, the Morrison Government has come up with the perfect solution – a $2B Business Securitisation Fund to transform small business access to funding for growth and a Business Growth Fund to support start-ups.
Peter Strong, CEO of COSBOA stated today, “we congratulate the Government, and the Treasurer Josh Frydenberg, on this decision. It’s a well needed game changer for financing of small businesses. In more recent days securing access to affordable capital has become the Number 1 challenge for small business owners in Australia.”
“The problem experienced by start-up businesses and established businesses alike, is that our banks have relied solely on past earnings rather than taking future earnings potential into account. As a result, if the business owner doesn’t have a house (or other major asset) to put on the line as security then they are stuck - and Australia misses out on the employment that can be generated by the future growth of these businesses.”
Mr Strong added, “small business owners often tell me that the only time they can get a loan is when they no longer need it. Others have told me that they have had to travel overseas to get finance and, using the same business plan as they used in Australia, they get their loan. This was a crazy and damaging situation.”
COSBOA also acknowledges the role of Kate Carnell and her team at the Office of the Australian Small Business and Family Enterprise Ombudsman (ASBFEO). COSBOA members, particularly CAFBA, can also be pleased with their efforts.
Mr Strong further stated, “it is by no means ‘free money’ but small businesses that are sound and have good growth potential will finally have access to affordable finance.”
COSBOA notes that today’s announcement also addresses the issue of securing finance for new business start-ups via the establishment of the Australian Business Growth Fund. This development puts Australian start-ups on a level footing with other countries like the United Kingdom and Canada.
Mr Strong stated, “importantly, the Treasurer understands that the announcement would fail if the process of managing the funds is convoluted and complex. We, with others, have already been asked to join in designing the system to make sure it is fit for purpose and not made unfit by interference from those who don’t understand our sector. We look forward to working with the Morrison Government, the Treasurer, the Small Business and Family Enterprise Ombudsman and other stakeholders to make these two funds accessible for small business owners and start-ups. Excellent.”