The government yesterday announced an investment of up to $15 billion to enable smaller lenders to continue supporting Australian consumers and small businesses.
Below is the commentary Anthill has managed to get from a few Aussie business leaders on what impact this funding will have on our SMB community, and whether it will go far enough.
Arun Maharaj, CEO of HashChing
“Small businesses are the engine room of the Australian economy and employ 5 million people every year. It’s critical that measures are in place to support this vital sector during these very difficult times.
This much needed financial support will definitely help in the short term and be an immediate sugar hit. Injecting this funding specifically to smaller lenders will help them to stay nimble and further support their ability to be quick and efficient at getting out the necessary loans to SMEs. SMEs desperately need quicker access to funds, which is what the smaller lenders are able to provide.
The question is, will the funding go far enough?
I think the Government needs to go further and consider tax relief such as extensions of time to lodge and pay tax obligations. Additionally, the government should look to make it easier for SMEs on a quarterly GST cycle to elect and change their GST reporting to monthly, if that assists with obtaining quicker GST refunds.”
Yanir Yakutiel, CEO of Lumi
“I think Lumi and other SME lenders can play a really important role in helping the government implement this policy. The government and the big four banks have several advantages, such as their balance sheets and customer base; however, the same structural and technological challenges the banks faced serving SMEs before the crisis remain true. That’s why they need to utilise SME lenders such as Lumi as a conduit to customers as the best and most efficient way to get capital from the government to small businesses.
SME lenders like Lumi have the origination, underwriting and servicing capabilities to handle a large volume of small ticket specialised business loans that banks simply do not have. The implementation of the policy will undoubtedly have to rely on the fintech lenders.”
*Yanir has also been in discussion with the Treasury, AOFM and major banks about this and is offering Lumi’s help to act as a conduit to distribute capital to the SME sector.
Max Bluvband, Founder and CEO of AppsVillage
“As an SME lender, we welcome this move from the Australian government. SMEs are the backbone of the Australian economy and supporting them must be a priority for the Government during this difficult time. The current market conditions are taking their toll primarily on SMEs and cashflow is the difference between survival and foreclosure.
The Government must continue to recognise the increasingly vital role than non-bank lenders have in supporting borrowers in the Australian market.”
Dirk Steller, Seed Space founder and managing partner
“The Australian government’s response to support SME lending through the AOFM is timely and critical as banks face their own funding concerns. The SME sector is a significant employer in the Australian economy and these steps will help support businesses, and importantly their employees and families in this very challenging period.
Importantly these actions mitigate some of the potential multiplier effects of credit re-pricing that can occur in stressed market environments, where banks have the potential to take advantage of their customers. These actions also put the larger banks on notice, that there is competition despite the current uncertain conditions, and that credit pricing is being scrutinised and SMEs know they have other financing options.
The FinTech lending sector is developing rapidly in Australia, and those who are eligible to participate in this program will be well placed to provide fast response times on funding requirements. It will be interesting to see how this will be process will be managed and which instruments will be eligible in the AOFMs investment into wholesale funding. The continuity of competitive credit pricing is vital for the support of economic growth driven from the SME sector.”