Ombudsman Kate Carnell said a government backed approach to small business lending was worth exploring, adding “other countries have identified a similar problem and come up with solutions”.
Many small businesses were struggling to get reasonably priced finance, she said.
The government owned British Business Bank sources funds from banks, leasing companies, venture capital funds and web-based platforms to finance small businesses in the UK – start-ups, businesses scaling up or looking to stay ahead.
Business advisor Bob Green from Western Sydney Business Centre said the government backed business bank model seemed like a good idea.
He said access to finance was one of the biggest challenges small businesses faced.
“Banks are more focussed on loans that are supported by bricks and mortar and in the majority of cases, small businesses are unsecured,” he said.
Mr Green said the Centre worked to support small businesses including helping them to identify solutions to cash flow problems.
“We can look into what grants and loans are available to them before they launch to map and optimise their cash flow.”
Ms Carnell said in the wake of the Global Financial Crisis, banks had tightened lending requirements for small businesses.
“Banks are happy to lend to small businesses, but only if they have security such as property or cash,” Ms Carnell said.
“The requirement for property security limits capital availability for small businesses with good cash flow and good prospects. Funding for many small businesses is unavailable at a reasonable cost.
“The British Business Bank can provide a government-backed 75 per cent guarantee against the outstanding facility balance, potentially converting a ‘no’ credit decision from a lender to a ‘yes’.
“The British Business Bank can also help small finance providers to tap institutional investors’ funds.
“Without a creative approach to small business lending in Australia we risk stifling growth, investment and employment.”
For business advice, visit Western Sydney Business Centre at www.wsbusiness.com.au or Facebook.com/wsbusiness.
WHAT IS THE BRITISH BUSINESS BANK
The British Business Bank is 100 per cent government owned, but independently managed. It doesn’t directly lend money but instead works with a number of “partners” including banks, leasing companies, venture capital funds and web-based platforms. Businesses apply for finance through the partners who are able to lend more, especially to younger and faster growing companies.
