Australia has a broad and deep range of finance providers and products that continue to emerge to facilitate business customers create or take up opportunities to stimulate economic growth and regional development. The focus of this paper is on debt finance available to small to medium-sized business customers [SMEs] offered by members of the Australian Finance Industry Association [AFIA]. AFIA SME finance members range from ASX-listed bank and non-bank financiers, OEM-captives, independents through to entities that are SMEs in their own right. Distribution channels include direct or via intermediaries and online access. Products offered are designed to suit SMEs through their life-cycle from start-up, day-to-day consolidation and growth through to major expansion as the business matures.
Key types include: equipment or asset finance and a range of working capital solutions designed to minimise the need for SMEs to spend their personal income or put at risk personal assets including the family-home. Enabling access to affordable capital facilitates innovation and risk-taking with flow-ons to improved capital market efficiency. Diversity in product and providers enables access to SME finance by the financially underserved or disenfranchised segments of the SME population.
AFIA recognises that to have sustainable, long-term growth, our members need to cultivate trust and provide finance in a way that meets community standards and expectations; a key theme emerging from the Banking & Financial Services Royal Commission. Equally, Government intervention and regulation of SME finance needs to be appropriate and proportionate to balance SME protection while encouraging diverse and innovative finance offerings. In AFIA’s view, a key limitation in utilisation of non-traditional bank finance by SMEs to support and grow their businesses is a lack of awareness or understanding by SMEs and their trusted-advisers of the diversity and depth of alternate options for SME finance currently available in Australia.
This paper was presented in July 2018 at the 23rd Melbourne Money and Finance Conference, which explored the theme Business finance – current issues and developments.