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Small business cheer $2b end to funding drought

Small business cheer $2b end to funding drought

Sydney : Small business and non-bank lenders have endorsed the Morrison government’s plans to inject $2 billion into the small and medium enterprise loan market.

But regulatory experts warned the government must avoid taking too much financial risk and not weaken bank rules in its quest to stimulate SME funding via a separate proposed bank-financed Australian Business Growth Fund.

Banks and non-bank lenders scrambled on Wednesday to understand the Morrison government’s high-level dual announcement that it planned to buy packages of SME loans and work with regulators so big banks could set up a fund to make long-term passive equity investments in growing small firms.

Financiers are awaiting more details on what type of SME loans would be eligible for the Australian Office of Financial Management to buy from smaller banks and non-bank lenders in order to provide more funding for the SME market.