Christopher Kent: Small businesses finance in the pandemic

Address by Mr Christopher Kent, Assistant Governor (Financial Markets) of the Reserve Bank of Australia, to the Australian Finance Industry Association, 17 March 2021.

The views expressed in this speech are those of the speaker and not the view of the BIS.

Thank you for the opportunity to discuss small business finance with you today.

Small businesses play a critical role in the Australian economy. They employ nearly 5 million Australians. They account for about one-third of private (non-financial) output, and they are a key source of innovation and competition. Many small businesses use external finance from banks and other sources to manage their cash flows, invest in new equipment and expand their operations.

The Reserve Bank has been paying close attention to small businesses' access to finance for many years. Every year for almost 3 decades we have convened a panel of small businesses to better understand the issues they face. We also speak with businesses, banks and other financiers through our various liaison programs. A consistent and ongoing theme is that smaller businesses find it a challenge to access finance.

Today I'll discuss how smaller businesses have been affected by the economic downturn over the past year, with a focus on their access to finance. I'll also outline the measures that were introduced to help mitigate the additional financing difficulties that small businesses faced as a result of the pandemic.