 has followed the Ombudsman in highlighting the absence of “entrepreneurial finance” for Aussie start-ups.){kind=link}
The Reserve Bank of Australia (RBA) has followed the Ombudsman in highlighting the absence of “entrepreneurial finance” for Aussie start-ups.
The finding comes from the RBA’s latest bulletin, ‘Access to Small Business Finance’. It found small business owners and start-ups are still having difficulty accessing finance to start or grow their businesses.
“The report highlights the absence of entrepreneurial finance, with lenders wanting real estate – normally the family home – as security. Or alternative lenders offering short-term, high-cost capital,” Australian Small Business and Family Enterprise Ombudsman Kate Carnell said.
“The report also provides information on initiatives that might improve access to finance for small businesses. A number of (these) are recommendations in our ‘Affordable Capital for SME Growth’ inquiry report.
“In our report, we recommend establishing a business growth fund, focusing on long-term funding solutions for small to medium enterprises (SMEs) that have the capability to grow. SMEs would be able to apply for between $250,000 and $5 million, with terms up to seven years, secured against the business.
“This approach has been effective internationally. We believe it would be a game changer for Australia.
‘Significant barriers to accessing finance’
“Another of our recommendations, also referenced in the RBA’s report, is an Australian government guarantee scheme where member banks apply for a government guarantee to partially support a loan to SMEs with a strong business case, but insufficient real estate or business assets.
“There is a funding gap for small businesses seeking capital. And there are significant barriers to accessing finance, all raised in the RBA report and our own.
“These issues stifle business growth, employment and investment.
“If the financial-services sector would change the way it thinks and does business with SMEs, then businesses could seize new opportunities in markets and strengthen their competitive position.
“This would in turn have a considerable benefit for Australia’s economy.”