Support rolls in for investment fund for high growth SMEs

On Tuesday, Mr Morrison said the government will partner with banks and super funds to create a $100 million small business investment fund, the Australian Business Growth Fund.

Ms Carnell welcomed the announcement, noting that the ASBFEO earlier identified the need to address a critical funding gap for long-term, patient capital to enable up-and-coming, high growth potential small to medium enterprises (SMEs) to flourish. 

"We support government investment of $100 million into the Australian Business Growth Fund and a matching commitment by the Commonwealth Bank of Australia, National Australia Bank and HSBC Bank," Ms Carnell said. 

As announced, the fund will be managed by private sector expertise and will benefit SMEs with annual turnovers between $2 million and $50 million.

"Minority shareholding up to 40 per cent will enable these businesses to retain control of their company; a very different scenario from traditional private equity funding.

"Similar models in the UK and Canada are tried and tested; addressing barriers to accessing affordable capital for businesses that have gone on to demonstrate successful growth," Ms Carnell said.

IPA advocates creation of business investment fund

In August 2015, the IPA Deakin University SME Research Centre released the first Small Business White Paper, which included a chapter on the lack of affordable and accessible finance to SMEs and made recommendations to address this problem.

The IPA advocated for the establishment of a loan guarantee scheme, based on those which exist in almost all developed countries. This recommendation was included in subsequent IPA pre-budget submissions and has been adopted by various political parties at federal and state levels.

Additionally, in publishing the 2018 Australian Small Business White Paper, the IPA repeated its call for a structural change modelled on the British example wherein the banks are levied to create a corpus of funds to enhance access to finance for slightly higher-risk SMEs and start-ups.