The big four banks – Westpac, CommonWealth, NAB and ANZ – are each participating in the federal government’s new small business growth fund.
The fund is being established in order to address the need of Australian small businesses for cash in order to scale and expand, avoiding the very real potential of going further into debt, ultimately supporting the economy.
Very soon small business owners will be able to access the fund and partner with the big four banks to secure funding for their future growth plans.
The banks have all agreed to take part in the small business growth fund by each tipping in $100 million. The fund is eventually expected to grow to $1 billion.
“The whole idea is if you’ve got a business that you may want to grow, expand, to innovate, to buy new equipment, but you don’t want to increase your debt profile,” Treasurer Josh Frydenberg said on Wednesday.
“This fund offers the opportunity to get a capital injection from equity, to get an opportunity to partner with the growth fund, who will take a minority stake in your business.”
Trent Innes, Xero Australia and Asia Managing Director, said “We welcome the announcement of the Business Growth Fund and are pleased to see government and business coming together to stimulate growth with innovative approaches to financing.
“However, while equity financing is crucial to support high growth ventures that are too risky for debt financiers, only a miniscule slice of the small business sector will ever qualify. What we also need is cheaper and more varied debt offerings from banks and fintechs to fund more standard small business growth across a much broader base.”
Dynamic Business will follow this story and bring you future updates.