A ban on borrowing in superannuation could be in the works, which will impact businesses that have their office space within their superannuation funds.
As previously reported, the Labor Party has been on the record to say that it would support a ban on borrowing in superannuation, which is principally through self-managed super funds (SMSFs).
One lender for commercial properties, Thinktank, fears that this ban eventuating would put pressure on an already stressed lending market for SMEs, and remove an “important debt instrument” and source of retirement savings for business owners.
“It’s worth noting that since December 2013, we have financed more than 300 commercial property-secured LRBAs, with that part of the loan book currently standing at $165 million,” said Thinktank chief executive Jonathan Street.
“Importantly, we have had practically zero arrears history — only one loan has ever defaulted in the wake of a cyclone and that loan did not incur a loss, and 81 per cent are currently repaying principal and interest in alignment with their retirement targets.”
Mr Street said that LRBAs for commercial property have proven to be a “highly performing borrowing and wealth management option when in the hands of responsible, disciplined lenders and well-advised borrowers”.
While advisers to the SME community are concerned about the future of borrowing, best practice is to hold fire on any radical strategy shifts.
“We’ve seen enough times where the government of the day hasn’t been able to get proposed policies, let alone the opposition, so I think there’s a fair bit of water to go under the bridge before we can have some certainty around these measures,” said Hewison Private Wealth’s Chris Morcom.
“History is littered with policy proposals that never actually got legislated.”