Powered by MOMENTUM MEDIA
the adviser logo
Growth

Bill to establish $2bn SME fund approved

by Reporter5 minute read
Australian House of Representatives

A $2 billion securitisation fund, designed to improve access to finance for Australia’s SME sector, has passed both houses of Parliament.

The Australian Business Securitisation Fund (ABSF) Bill 2019 has officially passed both he House of Representatives and the Senate.

To continue reading the rest of this article, create a free account
Already have an account? Sign in

The securitisation fund provides additional funding to smaller banks and non-bank lenders to on-lend to small businesses on more competitive terms.

The ABSF will be administered by the Australian Office of Financial Management (AOFM), which was previously involved in the residential mortgage-backed securities market in 2008.

Advertisement
Advertisement

The funding difficulties faced by small businesses was highlighted by a recent survey of 1,750 business owners nationwide, commissioned by SME lender Judo Capital and conducted by East & Partners.

The study revealed that the gap in SME funding, which has emerged from an inability to access finance that they would otherwise utilise, has surpassed $83 billion.

The Judo research found that the average SME applied for $800,000 in new borrowings in the last year, with those that successfully obtained finance securing $600,000 in new credit, while the average unsuccessful credit application was $1.1 million.

According to respondents, the main reason SMEs were prevented from accessing credit in the last year was as a result of collateral requirements (34 per cent), slow turnaround times (16 per cent), inappropriate terms/structure (11 per cent), interest rate (8 per cent) and an unsatisfactory credit rating (4 per cent).

Conversely, SMEs that accessed the full amount of new capital they sought cited credit approval speed (63 per cent), ring fencing of security needed away from personal assets (58 per cent), actual availability of the full debt sum being sought (50 per cent) and mitigating terms and conditions (42 per cent) as the most important factors in completing the deal.

The Coalition government’s Treasury Laws Amendment (Increasing the Instant Asset Write-Off for Small Business Entities) Bill 2019 also passed both the upper and lower houses of Parliament last week.  

The bill was designed to increase the instant asset write-off threshold from $25,000 to $30,000 and broaden the eligibility criteria to SMEs with an annual turnover of up to $50 million, up from $10 million.  

[Related: Parliament approves $30k SME asset write-off]

Bill to establish $2bn SME fund approved
aushouseofrep ta
TheAdviser logo
aushouseofrep ta

JOIN THE DISCUSSION

You need to be a member to post comments. Register for free today

MORE FROM THE ADVISER

sam jolley elders ta iwsfut

Elders welcomes 1st national growth and asset finance manager

Elders Home and Commercial Finance, the independent broking arm aligned with the real estate network of Elders Ltd,...

READ MORE
rael ross butn ta rerexr

Butn achieves record originations in July

Cash flow financier Butn has released a trading update, revealing that its 2023 financial year commenced with a new...

READ MORE
daniel tuttlebee resimac asset fInance ta l27zun

Resimac takes controlling stake in Sonder

Resimac Asset Finance has expanded its acquisition stake in equipment finance business Sonder Equipment Finance...

READ MORE
magazine
Read the latest issue of The Adviser magazine!
The Adviser is the number one magazine for Australia's finance and mortgage brokers. The publications delivers news, analysis, business intelligence, sales and marketing strategies, research and key target reports to an audience of professional mortgage and finance brokers
Read more