The Australian government is planning on providing $2 billion in loans to small business for future company expansion.  The new offering, called the “Securitisation Fund” aims to provide dollars through smaller banks and non bank lenders, while providing an additional “Business Growth Fund” “that will enable big banks and super funds to take passive equity stakes in small business.”

This is a fantastic opportunity for small and medium businesses in Australia, however there has been criticism surrounding the lack of a concrete plan surrounding the government loan agenda.  

According to the “Australian Bureau of Statistics’ first management capability survey, published in August 2017,” only one third of medium sized businesses “(defined as those with 20 to 199 employees) have a written plan of any kind. The percentage is much lower for small companies – those with five to 19 employees (and lower still for micro-businesses, employing four or fewer people).”

With a lack of a written expansion plan, some fear that the available $2 billion will either not be spent or go to waste on unprepared small businesses.  

In 2018, The Conversation  “collected data from 145 of the companies that have been through one of our growth programs. In the past financial year they increased their revenues, on average, by 27%, their profits by 19%, and employment by 32%. Their growth was the result of learning how to develop and execute an expansion plan, that is, knowing how to generate and where to deploy financial capital in order to grow.”

The key is having a growth strategy already in place before receiving loans, or having a program in place to assist companies in doing so.  Currently the $2 billion is just financial help and does not prepare small businesses to expand effectively.  

I can support adding a program to aid owners in developing an expansion plan or at the very least, require it within applications to at least guarantee a business has thought about how they will utilize the money.  In the end, dealing with small businesses is always a long shot, but still a shot that needs to be taken for benefit of a community and nation.  I like this offering and want to see where it goes for 2019 and beyond.