Senators urged to support Business Growth Fund
The small business ombudsman has urged senators to back Scott Morrison’s $540 million Business Growth Fund, saying it will significantly encourage business growth and promote economic expansion.
The business fund, which is expected to see some resistance in Senate this week, is planned to expand to $1 billion and provide a source of “patient capital” for small and medium enterprises.
“We strongly support the investment by the Commonwealth in the Australian Business Growth Fund to provide much-needed patient capital to SMEs seeking to realise their high-growth potential,” said the Australian Small Business and Family Enterprise Ombudsman Kate Carnell.
“This investment is critical to the success of the fund. Previous attempts leaving it to industry to establish the business growth fund, resulted in no action.”
The fund is aimed at SMEs that need patient capital and have been overlooked by venture capitalists and other investors. The fund is focused on helping an SME grow to a point where they don’t need the equity investment.
“The overwhelming feedback to my office from the small business community is that a lack of access to funding is their biggest barrier to growth,” said Ms Carnell.
“RBA governor Philip Lowe has made a number of pertinent observations about the credit squeeze impacting the small business sector and how that’s effecting the economy more broadly.
“In November last year, Dr Lowe said we will all be better off if businesses have the confidence to expand, invest, innovate and hire people.”
According to the Ombudsman, the business growth fund will help address the critical funding gap as identified in the Affordable Capital for SME Growth report, for long-term, patient capital to enable up-and-coming, high growth potential SMEs to flourish.
“Similar models in the UK and Canada have been tried and tested; providing access to affordable capital for businesses that have gone on to demonstrate successful growth,” she said.
The government announced last year it is committing $100 million in funding to establish the BGF and partnering with other financial institutions to provide equity funding to SMEs. The major banks including ANZ, CBA, NAB and Westpac have each agreed to commit $100 million to the BGF. HSBC and Macquarie Group will each contribute $20 million.
This will give the BGF an initial investment capacity of $540 million, with the ambition to grow the fund to $1 billion as it matures.