Representatives of small business are watching nervously from the sidelines as the royal commission hears nightmare cases of failed enterprises causing people to lose their homes.
But they warn it could backfire if the banks are hit with tighter lending regulations, causing the supply of business funds to dry up.
The banks and the small business lobby say the principle of caveat emptor, buyer beware, is at stake and that greater prudential regulations have already been imposed.
On the other hand, consumer advocates say responsible lending legislation should at the very least be extended to cover loans where the family home is on the line.
Listen to the episode at ABC Radio National: Saturday Extra