PM pledges $100m to small business growth fund
Small businesses will have access to $100m of taxpayer money under the Australian business growth fund, should the Morrison government be re-elected.
On Tuesday, the coalition announced that in addition to the establishment of the fund, it would also be fronting up $10m. It comes just one day after the government committed $5m for grants to migrants wanting to start a new business.
The funding will form the basis of the coalition’s plan for small business growth that was promised back in November. It will provide ‘patient capital’ where an investor doesn’t expect to turn a quick profit.
“We’re backing all those Australians trying to make their small businesses into bigger businesses,” Morrison said on Tuesday.
“This is for those businesses like a local brewery or restaurant that wants to expand interstate or even overseas, or maybe a family owned construction company wanting to grow so they can meet demand.”
According to the Prime Minister, over the last six months the government has been working with a number of banks and financial institutions.
Treasurer Josh Frydenberg and Small Business Minister Michaelia Cash say they are confident the fund will gain the private sector support “needed to bring it life”.
The fund will be administered by an independent board and chair appointed by shareholders, initially made up-of the government and banks. It is expected to mature to $1bn over three to five years and help between 30 and 50 small businesses annually.
Kate Carnell, Australian Small Business and Family Enterprise Ombudsman welcomed the announcement of an Australian Business Growth Fund. The fund had previously been identified as a recommendation in the ASBFEO’s Affordable Capital for SME Growth report.
“Our report identified the need to address a critical funding gap for long-term, patient capital to enable our up-and-coming, high growth potential small to medium enterprises (SMEs) to flourish,” Carnell said.
“We support government investment of $100m into the Australian Business Growth Fund and a matching commitment by the Commonwealth Bank of Australia, National Australia Bank and HSBC Bank.”
“However, we question the absence of commitment by Westpac, ANZ and Australia’s super funds.”
Carnell said that the minority shareholding model allowed for growth and control for small business owners.
“Importantly, the fund will be managed by private sector expertise and will benefit SMEs with annual turnovers between $2m to $50m,” Carnell said.
“Minority shareholding up to 40 per cent will enable these businesses to retain control of their company; a very different scenario from traditional private equity funding.”
While the plan has the support of the small business sector, the coalition still faces an uphill political battle. The party is down 48 to 52 in the latest two-party preferred newspoll results.