The funding crisis that has been hitting Australian business isn’t just a local phenomenon. In Britain and in the US, small- and medium-sized businesses have also had trouble extracting funds from banks who have cut back business lending in the wake of the GFC.
But overseas governments and markets have been much better about responding to this problem.
In the US, the Obama government has poured billions into specific guarantees from SME loans, which have helped keep small businesses afloat and, most importantly, employing people.
In Britain, a new start-up lender called Haymarket Financial has entered the market to provide funding for medium-sized business with an enterprise value of $140 million to $700 million that need funding for growth but are too small to tap into corporate bond markets.
As Britain’s Telegraph newspaper reported over the weekend, some big names have backed Haymarket, including Lord Rothschild and Sir Ronald Cohen.
But there’s another big name backer that is more familiar to Australians – our taxpayer-funded sovereign wealth fund, which is called the Future Fund.
Exactly how much the Future Fund has tipped in isn’t clear, but we do know it has been part of a fundraising round worth $633 million in total.
Nothing wrong with the Future Fund getting on board with this deal, of course – it looks like quite a solid model which has received the support of some big names.
But there are probably plenty of medium-sized companies Australian looking for expansion funding right now that are no doubt feeling a little jealous right now.
The opportunity to access funds from a specially-focussed business lender would be a real win for our banking sector and hundreds of entrepreneurs.
We won’t begrudge the British their good fortune, but we will say this: While we don’t know when competition and innovation is going to increase in the Australian business lending market, we do hope governments continue to find way to encourage new players into the market, and we hope our Future Fund stands ready to support them.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
