IPA pushes government on small business loan guarantee scheme

In its pre-budget submission, the IPA has put forward a suggestion to introduce a state-backed loan guarantee scheme to provide better access to loan finance from the banks and commercial lenders.

“To help increase the availability of much-needed affordable loan finance to the small business sector, the federal government should introduce a state-backed loan guarantee scheme,” said IPA chief executive Andrew Conway.

“Australia is one of the only countries in the developed world without such a scheme.

“A limited state-backed guarantee would encourage banks and other commercial lenders to increase loan finance available to small business.”

Mr Conway also highlighted research from the IPA’s small business white paper indicating that risk-adjusted lending was “not the norm” in Australia, while the cost of debt for small businesses continued to be high.

“There is a strong case for designing and implementing a loan guarantee program in Australia to help remedy the specific problems of smaller and younger start-ups unable to finance new investment opportunities through normal commercial channels,” said Mr Conway.

“Access to responsible and affordable finance will help many small businesses reinvest in their businesses and help create new ideas, new capacity and new jobs.

“When appropriately designed and administered, loan guarantee programs can deliver value for taxpayers through their support of employment, growth, productivity, innovation and exporting.”