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The IPA has come out in support of the FSI’s crowdfunding recommendation, saying it will provide greater access to funding for small and medium-sized businesses.
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SMEs to benefit from additional funding options
09 December 2014
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8 minute read
Recommendation 18 of the FSI's final report recommends measures to “Graduate fundraising regulation to facilitate crowdfunding for both debt and equity and, over time, other forms of financing.”
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According to the report, the objectives of the recommendation are to facilitate innovations in fundraising that have emerged from new technologies and to ensure policy settings are consistent across funding methods and that they provide firms, particularly SMEs, with additional funding options.
“The Inquiry recommends that Government should graduate fundraising regulation to facilitate securities-based crowdfunding and consider more holistic regulatory settings to facilitate internet-based financing,” the report stated.
“Submissions generally support a more accommodative regulatory regime and note that crowdfunding would give some SMEs, particularly start-ups, more funding options. Stakeholders suggest that Australia is already lagging other jurisdictions in facilitating crowdfunding.”
The IPA’s Tony Greco told AccountantsDaily that the institute supports the FSI recommendation, saying it will help small business by opening up the finance sector.
“When the interim report was tabled, they didn’t make a big song and dance about access to finance for small business; it said there is a problem, but it’s always been there. I think this time round the report ups the ante a little bit,” he said.
Mr Greco said the recommendation could increase competition in the financing space.
“These more innovative ways of generating capital for small business might open up the marketplace,” he said.
“The big banks will in turn have to provide more competitive solutions, so we are very supportive of the fact that the report now acknowledges there is a problem and, secondly, there are some recommendations that open up that market place for small business.”
In a joint statement yesterday, acting assistant treasurer Mathias Cormann and small business minister Bruce Billson said the government will release a discussion paper on the characteristics of regulatory frameworks to facilitate crowd-sourced equity funding, including the model put forward by the Corporations and Markets Advisory Committee in a report released in June 2014 and a model similar to that recently implemented by New Zealand.
“We are keen to ensure that any crowd-sourced equity funding model appropriately balances supporting investment, reducing compliance costs (including for small business) and maintaining an appropriate level of investor protection,” the statement read.
"Small business and entrepreneurs are a crucial driver of productivity and economic growth. The release of the discussion paper progresses our election commitment to improve small businesses’ access to affordable finance."
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