The Minister for Small Business, Michael McCormack, has welcomed National Australia Bank’s introduction of shorter, plain English loan contracts for small business borrowers.
“I am pleased that the National Australia Bank has taken this step to ensure that small businesses looking to invest in their business can now do it in a more straightforward way through loan contracts that are easier to understand,” McCormack said.
“This action taken by the National Australia Bank follows the Carnell Report from April this year which identified that certain contract terms in lending documents posed a significant risk for small businesses looking to borrow money.”
The Office of the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) was requested by the Minister to conduct an inquiry into the adequacy of the law and practices with regard protection for small business borrowers in February this year, building on the evidence and information identified in the Parliamentary Joint Committee on Corporations and Financial Services inquiry into the Impairment of Customer Loans. The Carnell Report is ASBFEO Kate Carnell’s findings from this inquiry.
“Small business is the engine room of our economy and we are working hard to create the right policy settings to ensure that they can continue to thrive, and simplifying small business lending is a great outcome to achieve this,” McCormack continued.
“Small businesses do have a responsibility to work out what capital structure works for them but they should be treated fairly regardless, and it is great to see that National Australia Bank has taken this step and I hope more lenders come on board.”