Credit where credit is due

We know from the most recent Xero data that 50.6 per cent of small businesses started the year cashflow negative. It’s crucial that small businesses have access to the funds they need to survive and grow. That’s why we fully support the Australian Small Business and Family Enterprise Ombudsman’s inquiry announced recently that has been set up to dig into “initiatives to provide affordable capital to SMEs to start and grow their business”.

While the inquiry is focused on delivering reasonably priced, adequate loans to small businesses without collateral, it’s worth noting technology is already delivering some of this today. Small businesses on our platform can obtain nearly instant approval for unsecured loans of up to $250,000 at competitive market rates. ASBFEO Ombudsman Kate Carnell has noted that it’s loans of $100,000 or more that most commonly elude small businesses.

Through an application programming interface (API), small businesses can choose to share their financial data with lenders. Many small businesses also offer continuous certification of the data by their accountant, providing the lender clear and recent visibility of the state of the business.

Better data helps lenders manage their operations and risk more efficiently. When banks have a fuller picture of a small business, they can make more informed credit decisions. Lower risk leads to quicker lending decisions at competitive rates.

If we are going to create more jobs and growth in Australia, we need our small businesses – the engine-room of the economy – to survive and thrive. Both the government and technology have vital roles to play in making more affordable capital available to more businesses. We applaud the ASBFEO inquiry and look forward to its findings.

Ian Boyd, Financial Industry Director, Xero