Aussie SMB Ombudsman Suggests Government-Backed Business Bank

Australia’s Small Business Ombudsman Kate Carnell wants the country to establish a government-backed bank to support small businesses (SMBs), news reports said on Monday (Oct. 2).

The Sydney Morning Herald reported that Carnell is looking at a taxpayer-fueled bank as a way to address the issue of small businesses’ lack of access to capital. The SMB lending and banking market, the policymaker said, lacks competition, with bank regulations forcing lenders to focus on property-secured lending.

Kate Carnell added that for many small businesses without a property to mortgage, access to loans is “simply unavailable.”

A state-backed small business bank could be one option to address the matter, she added.

According to reports, Carnell outlined the suggestion in a submission to a Productivity Commission inquiry that’s exploring competition in the financial services industry. While policymakers must examine the state of bank regulation, Carnell also added in the submission that “an alternative option is for a government-backed approach to small business lending, such as the Commonwealth Government Clean Energy Finance Corporation” (CEFC).

“The fund was set up because of the barriers to entry into clean energy and the need for a bank-friendly business case in order to entice banks to lend in this area,” the submission reads. “Banks and the CEFC share the risk on these loans. It could be a useful model for government-backed small business loans, similar to the British Business Bank.”

A survey released last month by Commonwealth Bank found that 54 percent of small business owners in Australia said they don’t believe their own efforts in financial planning and forecasting are effective, while three-quarters are “in the dark” about the state of their own finances.

Nearly half (47 percent) of SMBs said they were experiencing “moderate to high” levels of stress related to financial and revenue performance, with 41 percent reporting moderate to high levels of stress related to cash flow management.