The Australian Small Business and Family Enterprise Ombudsman Bruce Billson has backed the RBA’s plea to banks to treat small businesses differently to consumers when considering loan applications.

Mr Billson welcomed further scrutiny of small business access to finance pledged by RBA Assistant Governor Chris Kent in today’s address to the Australian Finance Industry Association.

“Finance is the oxygen of enterprise,” Mr Billson says.

“Mr Kent’s comment that access to finance for small businesses has been a long-standing challenge and is now tighter than before the pandemic, is correct.

“I support Mr Kent’s plea to banks to take a different approach to small business borrowers, given that even under the existing Responsible Lending Laws, banks are not obliged to apply the same serviceability requirements to small businesses that need to be applied to households.

“I also share Mr Kent’s concerns regarding the banks lengthy and onerous process to securing finance, including substantial collateral requirements.

“Of course we need to strike the right balance, but any move to loosen onerous restrictions on access to finance for small business would be positive.

“The RBA has noted it expects business failures to rise as government support measures are phased out. This highlights the critical need for small businesses to have greater access to finance, to provide the cash flow necessary to get through the coming months.

“Overall, we welcome the RBA’s acknowledgement of the important contribution the small business sector makes to the economy as well as its efforts to continue to monitor small business access to finance and their prospects more broadly.”