November 14th, 2018 – The LNP government announces an exciting initiative that will improve funding access for the three million small and medium businesses (SMEs) in Australia. The $2 Billion taxpayer-backed Small Business Securitisation Fund will buy packages of secured and unsecured SME loans issued by smaller banks and non-bank lenders (like fintechs). Providing them with additional funding to be extended to SMEs at competitive terms.
The plan will provide an additional layer of competition to the Big Four bank lenders, diversifying the lendscape and developing small business in Australia. The initiative hopes to curb bank practices of mainly lending to self-employed business owners who are able to use their homes as collateral. Plans are also underway to establish a coalition as a bank-backed Small Business Growth Fund. Further diversifying the lending market.
And the timing couldn’t be better. While the RBA reports that small business is in a better position than it was following the financial crisis in 2008, 20% of small business owners are finding it increasingly difficult to acquire working capital. Furthermore, the conditions have worsened in recent months following the Royal Commission’s highly legalistic interpretation of responsible lending laws. Which have led to even stricter lending rules and often-prohibitive terms.
Alternative lenders have met this Securitisation Fund initiative with praise. Says CEO of Beyond Merchant Capital Larry Prosser, “Easy access to quick working capital is essential if we want the Australian economy to thrive. Small business development has enormous prospects, and its great to see Government formally backing this potential.”
Time will tell if $2 Billion will cut it. The Liberal Government may well just be testing the waters. But uptake is likely to be swift. Hopefully, this will reinforce the demand. Paving the way for some much-deserved small Australian business abundance.
Can’t wait for the Small Business Securitisation Fund to kick in? Apply for an unsecured business loan in minutes and be funded within 48 hours with Beyond Merchant Capital.
Speak with a lending specialist today about funding the growth of your business.