Powered by MOMENTUM MEDIA
realestatebusiness logo

Subscribe to our newsletter


Banks fail govt on small business credit

The banks’ unwillingness to provide cash flow lending to SMEs will condemn the federal government’s asset write-off provisions to failure, a leading fintech expert has warned.

Simon Isaacs, CEO of business loan matching platform eBroker, said the expansion of instant asset write-off announced in the budget should be a huge growth engine for small business and the economy.

“Instead it will probably ‘die in a ditch’ thanks to the big banks,” he said.

For businesses to take advantage of this policy, they need cash to purchase assets. According to Mr Isaacs, most small businesses have limited reserves, with banks these days refusing to lend on an unsecured basis.

“Sadly, we live in a country where our banks are simply not interested in funding small business without residential security,” he said. “They’ve become glorified building societies.”

Advertisement
Advertisement

“The government’s policy will fail because most SMEs simply don’t have the spare cash needed for widespread take-up, and the banks won’t lend to them.”

To prove his claim, Mr Isaacs pointed to the results of the initial policy in the 2015 budget. According to reports in March, only $547 million of claims were processed in a policy that forecast $5.5 billion over four years.

“The first iteration of this idea [in] 2015 was a dud, and it will fail again this year. The missing link is funding,” he said.

Claiming the banks won’t change, Mr Isaacs argued the government should do more to support the emerging non-bank business lenders.

“If the government was serious about innovation, you’d expect to hear a lot more about alternative funding, non-bank lending, fintech and the like,” he said.

“Relying on the banks to come to the party will condemn this to yet another wasted opportunity for growth.”

[Related: Assetline expands SME offering]

Banks fail govt on small business credit
mortgagebusiness

Latest News

While the central bank went hard on its third consecutive 50-bp hike – without considering another option – the August minutes reveal it...

The state’s Premier has said residents impacted by this year’s floods will be offered buy-backs and land swaps, however no date has been...

Australia’s regional homes are following trends observed in capital cities, with prices dropping by 20 bps over the three months to July. ...


VIEW ALL

Join Australia's most informed brokers

Do you know which lenders are providing brokers and their customers with the best service?

Use this monthly data to make informed decisions about which lenders to use. Simply contribute to the survey and we'll send you the results directly to your inbox - completely free!

Do you think the new NSW property tax will help or hinder first home buyers?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.