The MFAA has weighed in on the credit reform for small business debate, announcing its stance against the federal government’s plan to tighten credit availability for small to medium enterprises (SMEs).
The federal treasury’s green paper indicated plans to tighten credit availability for SMEs, and has called for public submissions in response.
MFAA chief executive Phil Naylor said the peak industry body did not support the government’s proposal, as there was no evidence that legislative reform was required in the SME credit sector.
“The [National Consumer Credit Protection] NCCP Act legislates against irresponsible lending practices, particularly in relation to the residential sector where there has been some evidence of poor lending practices at the margin,” Mr Naylor said yesterday.
“However, when it comes to lenders and brokers and small business credit, there has been no such evidence.”
According to Mr Naylor, lending to small businesses requires greater scrutiny by lenders and brokers and should therefore be treated differently to residential mortgages.
“We are concerned regulation would restrict the availability of credit to small businesses which will be of significant detriment,” he said.
More than 1,000 of the MFAA’s members are involved in small business lending, according to Mr Naylor.
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