The federal government has announced $15 billion in lending for small businesses as part of its $100 billion “bridge” to support the Australian economy through the spread of coronavirus.
The Australian Office of Financial Management (AOFM) will be provided with the investment, which will be facilitated through authorised deposit-taking institutions (ADI) lenders over a 12-month period.
Treasurer Josh Frydenberg said the loans will mean customers of SMEs can continue to access affordable credit in spite of “significant challenges”.
“Small lenders are critical to Australia’s lending markets, often driving innovation and providing competition for larger lenders,” he said.
The loan, which will also be available for non-ADI lenders in wholesale funding markets, complements the $90 billion facility announced yesterday by the Reserve Bank.
“Combined, these measures will support the continued ability of lenders to support their customers and in doing so the Australian economy,” Frydenberg said.
The government will provide the AOFM with investment with guidelines on undertaking investments, following plans to introduce enabling laws starting March 23.
Assets purchased by the AOFM will not be limited to residential mortgage-backed securities.
The Office will have the ability to invest in a range of asset-backed securities and warehouse facilities.
The AOFM is expected to begin investing in April.