The Morrison government will create a $2 billion lending fund to make it easier, cheaper and simpler for small businesses to raise credit.
In comments obtained by 9News, Treasurer Josh Frydenberg says small and medium-sized businesses are the “engine room of the Australian economy” but find it tough to access finance.
The funds would be available to small banks and lenders to ensure businesses are “firing on all cylinders”.
The new fund will buy bonds, packed with small and medium-sized business loans, sold to investors by regional and non-bank lenders.
The small business funding policy is to be promoted as a way to overcome banks typically only lending to the self-employed when they put forward their personal home as collateral for the loan.
Mr Frydenberg said the fund would be an “asset for the government” and wouldn’t increase debt.
“To … ensure that small businesses are able to fulfil their potential and continue to underpin economic growth and employment, the Australian Business Securitisation Fund will invest up to $2 billion in the securitisation market, providing significant additional funding to smaller banks and non-bank lenders to on-lend to small businesses on more competitive terms,” Mr Frydenberg said.
The government has already made concerted efforts to bring small businesses back into economic focus including bringing forward tax cuts five years earlier than expected and slashing red tape.
While Labor has expressed initial support for the fund, Shadow Treasurer Chris Bowen wants more detail around the Commonwealth’s potential risk.
He said there’s a role for such a scheme in the “small business policy landscape” but “the question is over the level of government involvement and budget treatment and this looks light on detail.”