The Government has announced that it will establish a $2 billion Australian Business Securitisation Fund. Treasurer Josh Frydenberg said small businesses currently find it difficult to obtain finance on competitive terms (unless the finance is secured against real estate). To overcome this, Mr Frydenberg said, the proposed Australian Business Securitisation Fund will invest up to $2 billion in the securitisation market, providing additional funding to smaller banks and non-bank lenders to on-lend to small businesses on more competitive terms. The Australian Business Securitisation Fund will be administered by the Australian Office of Financial Management (AOFM), consistent with its prior involvement in the Residential Mortgage Backed Securities Market in 2008.
The Government is also consulting with the Australian Prudential Relation Authority (APRA) and a number of financial institutions in regard to the establishment of an Australian Business Growth Fund that would provide longer-term equity funding to small businesses. The Australian Business Growth Fund is expected to follow similar international precedents, such as the United Kingdom’s Business Growth Fund, which has invested some $2.7 billion in a range of sectors since its establishment in 2011.
According to the Treasurer, such a fund has not emerged in Australia, in part, as a result of the unfavourable treatment of equity for regulatory capital purposes. However, APRA has indicated it is willing to review these arrangements to assist in facilitating the establishment of the Australian Business Growth Fund. To fast-track the process, the Government is hosting a meeting of key stakeholders in Canberra during the final 2018 Parliamentary sitting period (26 November to 6 December 2018).