Access to affordable finance is one of the most discussed — and least solved — challenges in the small business sector. Despite years of government attention and a proliferation of fintech lenders, many small businesses still find it difficult to access the working capital and growth finance they need on terms that make commercial sense. Here’s what the current data tells us.
Bank Lending Remains Constrained
Major bank lending to small and medium businesses has grown more slowly than overall business credit, with lenders citing concentration risk, loan-to-value ratio concerns and the administrative costs of small loan origination as key factors. The Reserve Bank of Australia’s Financial Stability Review consistently notes the disproportionate reliance of small businesses on personal assets (particularly residential property) as collateral for business lending.
The Rise of Alternative Finance
Invoice financing, equipment leasing, revenue-based financing and peer-to-peer lending platforms have grown substantially, particularly among younger businesses and those in sectors with strong receivables. ASIC’s regulatory sandbox and fintech licensing frameworks have enabled a new generation of lenders, though interest rates from alternative providers remain significantly higher than bank rates.
Government Guarantee Schemes
The SME Recovery Loan Scheme and its successors have provided some improvement in access, particularly during and after the COVID period. Current government-backed lending initiatives are summarised on the business.gov.au grants and finance finder.
SBTC’s Position
SBTC has called on the government to expand the scope of the Small Business Loan Guarantee program and to work with lenders to develop unsecured lending products that do not require residential property as collateral. We will continue to advocate for data-driven reforms that improve capital access for the sector.
