Major banks tip $400m into Business Growth Fund
The federal government’s planned Business Growth Fund has received a boost, with the big four banks each committing $100 million the fund to boost long-term funding for SMEs.
In addition to the $100 million contributions from ANZ, CBA, NAB and Westpac, HSBC has promised to contribute a further $20 million to the Business Growth Fund. The government will also match the big four’s contributions.
Consultation on the proposed fund was announced by the government in early November, at which point only the government’s own $100 million commitment had been unveiled. The government has pinned its hopes on the fund growing to $1 billion in size as it matures.
“The Australian Business Growth Fund was a recommendation in our Affordable Capital for SME Growth report, which identified the need to address a critical funding gap for long-term capital to enable high-growth potential SMEs to flourish,” said Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO).
“This fund will benefit high-growth SMEs with annual turnovers of between $2 million and $50 million.
“Importantly, the fund will be managed by private sector expertise and will invest between 10 per cent and 40 per cent in the chosen businesses, allowing the business owner to maintain their controlling interest, while giving them the funds they need to invest in growth.”
According to Ms Carnell, similar funding models have “proven successful” in Canada and the UK, boosting the availability of affordable funds being directed to growing businesses.
“We also support the government’s ongoing discussions with other financial institutions that are considering investing in the fund,” she said.
“This initiative comes at a time when many respected economists, including those at the RBA, are publicly recognising one of the biggest barriers to growth for SMEs is access to affordable capital and this has been a critical factor holding the economy back.
“The Australian Business Growth Fund will significantly encourage business growth and promote economic expansion.”