The head of a fintech business has said the government’s expansion of the asset write-off scheme is doomed to fail because SMEs lack access to capital.
In this week’s federal budget, the $20,000 instant asset deduction was expanded to SMEs with annual turnover of up to $10 million.
However, according to Simon Isaacs, CEO of business finance broking site eBroker.com.au, the measure will fail because the majority of SMEs lack access to enough capital to fund such asset purchases.
“The expansion of the instant asset write-off announced in the budget should be a huge growth engine for small business and the economy. Instead it will probably ‘die in a ditch’ thanks to the big banks,” Mr Isaacs said.
“The government’s policy will fail because most SME’s simply don’t have the spare cash needed for widespread take-up, and the banks won’t lend to them.”
He added: “Sadly we live in a country where our banks are simply not interested in funding small business without residential security. They’ve become glorified building societies.”
Mr Isaacs pointed to the first year of the asset write-off, announced in the 2015 federal budget. He said that reports in March suggested $547 million worth of claims were lodged, yet the policy had forecast $5.5 billion over four years.
“If the government was serious about innovation, you’d expect to hear a lot more about alternative funding, non-bank lending, fintech and the like,” he said.
“Relying on the banks to come to the party will condemn this to yet another wasted opportunity for growth.”