Patient Equity Borrowing Funding for Impatient SMEs has been a long time coming.
The recent federal government announcement of a government-led alternate source of financing is music to the ears of SME’s across Australia. The Australian Business Growth Fund is similar to models that have been used in the UK and Canada, patient equity borrowing will allow small business to invest in operational and geographic expansion, with regional areas a particular focus.
It does come with the big four banks and HSBC contributing to the fund. The fund will provide financial support as well as strategic advice, mentoring and networking referrals. The fund will look to take a 10% to 40% stake in the businesses. The banks can refer customers to the fund if equity financing is a better option than debt financing.
Is it all that it seems?
Firstly, it’s an election promise coming to fruition. That is a good thing and goes a bit against the stream. The hoops to qualify may prove a bridge too far for some SME’s. Adding to that the banks wield considerable influence as to what is right for the applicant.
If it’s truly an entrepreneurial led initiative to help SME’s grow, entrepreneurial-focused financial service businesses need to work with these SME’s. There is expertise needed to get through the myriad of regulations, taxation, accounting, strategy and growth. Not forgetting corporate advisory assistance. Being a nimble, service-led financial business is the key needed to make the most of this opportunity.
This is potentially a massive step in the right direction in terms of Government supporting small and medium business in Australia.
The success of it will be in the execution. Let’s hope they get it right.
For more information and clarification around the Australian Business Growth Fund, contact BridgePoint Group on 1300 656 141.