Last week, Treasurer Josh Frydenberg announced that the government would introduce a $2 billion Australian Business Securitisation Fund, providing significant additional funding to smaller banks and non-bank lenders to on-lend to small businesses on more competitive terms.
The Australian Business Securitisation Fund will be administered by the Australian Office of Financial Management, consistent with their prior involvement in the Residential Mortgage Backed Securities Market in 2008.
The Institute of Public Accountants chief executive Andrew Conway said the announcement was the “biggest structural reform” to small business finance and said it was in line with its lobbying efforts to introduce a loan guarantee scheme.
“In publishing the ‘2018 Australian Small Business White Paper’, we investigated enhancements to a Loan Guarantee Scheme. We also worked with the Australian Small Business and Family Enterprise Ombudsman through the Affordable Access to Capital Inquiry,” said Mr Conway.
“This bolstered our calls for structural change modelled on the British Growth Fund (UK) wherein the banks are levied to create a corpus of funds to enhance access to finance for slightly higher-risk SMEs and start-ups where the return on investment may be over a longer period.
“This could also be used as a vehicle to fuel a stronger securitisation market in Australia by enabling easier access to finance for small businesses.”
Further, the government is currently in consultation with APRA and a number of financial institutions in regard to the establishment of an Australian Business Growth Fund that would provide longer term equity funding to small businesses.
Mr Conway believes the announcement is attributable to the work undertaken through the IPA Deakin SME Research Centre and the Small Business White Paper process.
“These policy changes will have long-term impacts on the viability of the small business community and are a direct result of the applied research undertaken through the IPA Deakin SME Research Centre. This model of applied research is clearly leading the world in delivering critical reform to the SME sector backed up with tangible policy announcements,” said Mr Conway.