“The expansion of instant asset write-off announced in the budget should be a huge growth engine for small business and the economy. Instead it will probably ‘die in a ditch’ thanks to the big banks,” said eBroker.com.au CEO Simon Isaacs.
For businesses to take advantage of this policy, they need cash to purchase assets. And, according to Mr Isaacs, most small businesses have limited reserves, with banks these days refusing to lend on an unsecured basis.
“Sadly, we live in a country where our banks are simply not interested in funding small business without residential security. They’ve become glorified building societies.”
He added: “The government’s policy will fail because most SMEs simply don’t have the spare cash needed for widespread take-up, and the banks won’t lend to them.”
To prove his claim, Mr Isaacs pointed to the results of the initial policy in the 2015 budget. According to reports in March, only $547 million of claims were processed in a policy that forecast $5.5 billion over four years.
“The first iteration of this idea 2015 was a dud, and it will fail again this year. The missing link is funding.”
Claiming the banks won’t change, Mr Isaacs argued the government should do more to support the emerging non-bank business lenders.
“If the government was serious about innovation, you’d expect to hear a lot more about alternative funding, non-bank lending, fintech and the like,” Mr Isaacs said.
“Relying on the banks to come to the party will condemn this to yet another wasted opportunity for growth.”
Are you thinking of expanding your offering into SMSFs to grow your client base? Become a pro at SMSF fundamentals and make your clients bulletproof with the SMSF Foundations course. Learn directly from Aaron Dunn from Smarter SMSF as he deep-dives into the fundamentals you need to know to successfully undertake your work as an SMSF practitioner. Earn up to 21 CPD hours! Learn more