Australia needs state-backed SME investment: ombudsman

The small business ombudsman has released a long-awaited report on SME access to capital, and issued a range of recommendations, including the establishment of government-backed SME investment fund.

Releasing the Affordable Capital for SME Growth report, Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), said that Australian lenders consider SME loans to be high-risk, which has unwanted flow-on effects.

“In Australia, lenders consider SMEs high-risk and offer capital with restrictive terms and conditions, at high interest rates and demand bricks and mortar as security – which is usually the family home,” Ms Carnell said.

“Unfortunately, the unintended consequences of the financial services royal commission for SMEs might be an increase in banking regulation, making it even more difficult for them to access affordable growth capital.”

She said that while the fintech sector is stepping up to provide short-term, low-value finance options to SMEs, there is still a distinct lack of options when it comes to supporting long-term growth.

As such, she made eight recommendations aimed at increasing both the supply of funding and the information available to business leaders and entrepreneurs on their finance options.

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Source: Australia needs state-backed SME investment: ombudsman