In a joint statement, Treasurer Josh Frydenberg and Minister for Small and Family Business, Skills, and Vocational Education Michaelia Cash announced the release of exposure draft legislation on the establishment of the $2 billion Australian Business Securitisation Fund for consultation.
Following the announcement of the new fund in November, the government said that it would “significantly enhance” the ability for small businesses to access funds by providing “significant additional funding to smaller banks and non-bank lenders to on-lend to small businesses on more competitive terms”.
In its latest statement, the government noted: “This consultation is the next step in ensuring that small and medium businesses have access to the finance they need to fulfil their potential and continue to underpin economic growth and employment.
“Small businesses find it difficult to obtain finance other than on a secured basis – typically, against real estate.
“Small businesses that have already obtained finance secured against real estate, but wish to continue to grow, also find it difficult to access additional funding. Even when small businesses can access finance, funding costs are higher than they need to be.”
The government has noted that the fund will be administered by the Australian Office of Financial Management (AOFM), consistent with their prior involvement in the Residential Mortgage Backed Securities Market in 2008.
The consultation closes on 16 January 2019 and is available on the Treasury website.
Business leaders have so far been unconvinced that the fund will deliver meaningful reform to credit lending, with 42 per cent revealing in a recent My Business poll that they believe funding will actually be more difficult to obtain as a result of the fund.