New inquiry into international initiatives that provide SMEs affordable access to capital


The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has commenced an inquiry into international initiatives designed to address the funding gap for small to medium sized enterprises (SMEs).

[Related: Small Business Ombudsman calls for Govt to consider UK approach to boosting SME finance, Major barriers to SME investment explored by new report from Small Business Ombudsman and Small business loans in Australia: should you seek finance from a bank or an online lender? ]

The ‘Affordable Capital for SME Growth’ inquiry will investigate ways to provide affordable capital to SMEs to start and grow their business.

In addition to examining federal, state and territory initiatives to support small business start-ups and growth in Australia, Carnell said she will further examine international initiatives such as the British Business Bank and the US Department of the Treasury’s Small Business Lending Fund. As part of this undertaking, she said her office would consult with Australian and international experts in SME lending and risk management, and liaise with Australian regulatory bodies

Carnell said ASBFEO’s study last year, Barriers to Investment, reported that Australia’s 2.2 million SMEs rely on credit to start, operate and grow their business.

“Yet banks consider SMEs as high risk and offer lending with restrictive terms and conditions at a price few can afford, unless the SME owner has significant equity on property to secure against the loan,” she said.

“Our findings are in line with the Reserve Bank of Australia and the Financial System Inquiry 2014, which identified a funding gap, particularly for new small businesses.

“The draft report from the Productivity Commission’s inquiry into Competition in the Australian Financial System found that SMEs did not have access to the finance they need to grow their businesses.

“The need for equity in property coupled with a decline in the levels of home ownership, particularly in younger age groups, is resulting in the funding gap widening further.

“This new inquiry will make recommendations to allow SMEs that are trying to grow their businesses to have affordable access to the capital they need.”

The inquiry report will be released in July 2018.