Consultation open on $2 billion SME securitisation fund

The consultation, open until 16 January, is the next step in ensuring that SMEs have access to the finance they need to fulfil their potential and continue to underpin economic growth and employment, the Treasury’s website reads.

“Small businesses find it difficult to obtain finance other than on a secured basis – typically, against real estate,” Treasurer Josh Frydenberg has said.

“Small businesses that have already obtained finance secured against real estate, but wish to continue to grow, also find it difficult to access additional funding. Even when small businesses can access finance, funding costs are higher than they need to be.”

To overcome this, he adds, the Australian Business Securitisation Fund will invest up to $2 billion in the securitisation market, providing significant additional funding to smaller banks and non-bank lenders to on-lend to small businesses on more competitive terms.

The fund, announced in November, will be administered by the Australian Office of Financial Management, is consistent with its prior involvement in the residential mortgage-backed securities market in 2008.

More than 3 million small businesses employ around 7 million Australians.