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RBA roundtable seeks to address SME finance challenges

by Reporter11 minute read
Tight, money, cash

Australian small businesses have highlighted the finance challenges facing the industry in a roundtable discussion hosted by the Reserve Bank of Australia this week.

The roundtable discussion, agreed to at the end of 2017, included representatives from the Council of Small Business Australia (COSBOA), the Australian Banking Association (ABA), the Australian Securities and Investments Commission (ASIC), the Australian Prudential Regulation Authority (APRA) and ANZ CEO Shayne Elliott.

The roundtable was chaired by Philip Lowe, governor of the Reserve Bank.

Challenges highlighted by SME representatives in attendance included:

  • access to finance for start-ups and business expansion;
  • barriers to the comparison and switching between products and lenders;
  • over-reliance on secured lending and the role of housing and personal guarantees;
  • customising banking products for small business; and
  • the administrative burden of the loan application process.

The participants discussed a range of ideas for addressing these challenges.

Financial institutions shared their perspectives and discussed some of the steps that are being taken to address concerns of small business.

The roundtable also heard some suggestions on how to improve the accessibility of information for small businesses about their financing options, while APRA proposed revisions to the bank capital framework that relate to small business lending.

The roundtable discussed some other policy initiatives that are currently underway, including the introduction of comprehensive credit reporting and open banking. Participants agreed that these initiatives could help improve access to finance, and the Reserve Bank will continue to monitor developments closely.

Following the meeting, the RBA released the following statement: “Small businesses are very important for the economy. They generate significant employment growth, drive innovation and boost competition in markets. Access to external finance is an important issue for many small businesses, particularly when they are looking to expand.

“The aim of the roundtable was to provide a forum for the discussion of small business lending in Australia. The participants included entrepreneurs from the Reserve Bank’s Small Business Finance Advisory Panel, along with representatives from financial institutions, government and the financial regulators.”

ABA CEO Anna Bligh stressed the importance of strengthening communication between lenders and small business.

“Small business is the engine room of the Australian economy, accounting for more than 40 per cent of all jobs or around 4.7 million people,” Ms Bligh said.

“This roundtable was an important step in building the relationship between banks, small businesses and their representatives.

“Banks are working hard to better understand the needs of business, their challenges and how they can work with them to help them achieve their goals.”

The Small Business Finance Advisory Panel was established by the Reserve Bank in 1993 and meets annually to discuss issues relating to the provision of finance as well as the broader economic environment for small businesses.

The panel provides valuable information to the Reserve Bank on the financial and economic conditions faced by small businesses in Australia.

[Related: Government launches inquiry to improve access to SME loans]

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