Bruce Billson, the Australian Small Business and Family Enterprise Ombudsman, has thrown his weight behind Reserve Bank of Australia Assistant Governor Chris Kane’s call to treat small businesses separately from consumers when accessing finance.
“There are so many different finance options for small business nowadays,” Australian Small Business and Family Enterprise Ombudsman Bruce Billson says. “Accredited brokers are uniquely placed to help their small business clients find the product that suits their needs. Small business owners are time-poor and need quality and reliable advice so they can access the right-fit finance they need to grow their business.”
Billson’s comments come after a speech that Chris Kent gave to the Australian Finance Industry Association last week, where he spoke of the difficulties that many SMEs have in accessing finance.
“Smaller businesses have suffered significantly from the economic hardship caused by the pandemic,” said Kent. “A wide range of monetary, fiscal and private-sector measures have provided support. Indeed, many of those measures obviated the need for small businesses to take out additional debt over the past year.
“While businesses' confidence has improved markedly of late, a number of businesses, particularly smaller businesses, remain reluctant to take out new loans. Some of this reflects an economic outlook that, while improved, is still very uncertain. Also, access to finance for smaller businesses has been a long-standing challenge.”
“There are a range of policies in place to help support the supply of business credit as the economic recovery proceeds. Given the importance of small businesses to the economy, we will continue to pay close attention to their access to finance and their prospects more broadly.”
Small businesses were hit particularly hard by the pandemic and have traditionally had more barriers in front of them to receive loans than large enterprises, with far more having to use residential property as collateral for business transactions.
There is a law currently making a way through the Senate that could see a change in regulations regarding Best Interest Duty for brokers – something that is currently not required for commercial broking, but concerns many SMEs because of the grey area between business financing and personal financing.
Many SME owners use their houses as collateral in their commercial loans, and while the government insists that the new BID law would only pertain to consumer-facing brokers, there is an obvious potential for confusion when SME finances and personal finances intertwine as closely as they often do for small business owners.