With credit growth decelerating across the economy, banks are keen to encourage a reverberation in small business borrowing.
There are known risks if you’re investing in a business like a new cafe. But if you’re investing in a new age cafe that also sells software subscriptions, that’s where real risk is taken. Australia is well positioned to develop big disruptive technologies. If the money goes into those sorts of ventures, especially software technologies, that’s where the benefits are for Australia, because of the export opportunities.
It’s an important part of the small business sector that the major banks already support and have decided to show their commitment to this sector by increasing lending to this market, some banks are lending up to $1m for new business start-ups without property security.
New businesses with a well-articulated business plan and credible cashflow forecasts would be very deserving on funding. Innovative small businesses are essential to maintain a strong economy and it is pleasing to see banks stepping up and recognising this with dedicated funding. Businesses with a unique value proposition or well developed intellectual property should be provided the opportunity to bring their ideas to market.
Peter Strong, executive director of the small business lobby group the Council of Small Businesses of Australia, also welcomed banks pledging funds into new businesses.
“It’s great news because this is a lot of money in recognition of the importance of small businesses,” Strong said.
“The other interesting point is that a lot of money has been put into the motor vehicle industry, which we can see remains problematic. Investing money into the development of small businesses is a great way to give more certainty to our economic future.”
As a minimum, start-ups needed to have a business plan, a cash flow forecast, recent personal tax returns and no negative credit rating to apply for a loan.