NAB expands definition of small business

NAB said last week it supported 72 of 76 recommendations put forward by commissioner Kenneth Hayne. 

The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, congratulated the lender in expanding its definition of small business beyond the aggregate $3 million in the Banking Code of Practice 2019.

"It’s definitely a step in the right direction, although we continue to call on the Australian Banking Association (ABA) to adopt the Hayne recommendation in full," Ms Carnell said.

Recommendation 1.10 – Definition of ‘small business’
The ABA should amend the definition of ‘small business’ in the Banking Code so that the Code applies to any business or group employing fewer than 100 full-time equivalent employees, where the loan applied for is less than $5 million.

"We feel up to $5 million is appropriate for many small businesses, especially capital intensive businesses and family enterprises, such as farms and manufacturers," Ms Carnell noted. 

"Anything below $5 million is clearly out-of-date and does not represent the true lending picture of Australia’s small businesses."

She reiterated that small businesses are the engine room of the Australian economy, which is why it is vital they are able to grow and to employ.

"I applaud NAB for taking a leadership position and urge other banks to follow.

"The ABA should immediately accept [Hayne] Recommendation 1.10 and amend the Banking Code to ensure more small businesses are covered," Ms Carnell concluded. 

The ABA, however, said earlier it has not yet reached a view on this issue and believes more consideration needs to be given to the issue by regulators, the ABA and the small business community, particularly the change from total credit exposure to per loan facility.