No quick fix

It was a good idea from CPA Australia: let’s invite our Canadian counterparts at CGA Canada to a roundtable on an ambitious topic: unlocking the potential of the SME sector.

SmartCompany founder Amanda Gome hosted this morning’s roundtable, which included Small Business Minister Craig Emerson, shadow minister Bruce Billson, head of the ACCC Graeme Samuel and the big names in SME policy development.

The presence of the Canadians was important too, as they had what we thought was one of the best ideas we have heard in addressing the credit squeeze hitting small business – a special Government-owned bank (called the Business Development Bank of Canada) that focuses on lending to SMEs, and has supported 28,000 Canadian firms to the tune of more than $13 billion.

We might have liked the idea, but Emerson was lukewarm and Graeme Samuel was unimpressed, saying the collapse of a similar organisation in Victoria during the early 1990s showed bureaucrats have no place becoming bankers.

The main thrust of most participants, particularly Emerson, was that we need to focus on improving competition in the sector, by encouraging more players into the market and ensuring capital flows to the smaller banks already operating in Australia.

Of course, this is going to take a lot of time. As the chief executive of the Australian Bankers Association, Steve Munchenberg, says, the banking sector has changed for good. While the global economy is in recovery mode, problems in the global financial sector persist and capital remains tight everywhere.

And that has changed how bankers act, he says.

“Banks were lenders. What they are now are allocators of scare resources.”

So in the short- to medium-term at least, little is likely to change on when it comes to banks lending to SMEs. Good companies will get funding, but it won’t be easy and it won’t be cheap.

But that doesn’t mean SMEs aren’t adapting to these environments.

Both Greg Evans from the Australian Chamber of Commerce and Industry and George Yammouni, Franchise Council president and founder Bathroom Werx, are already seeing evidence of this.

In Evans case, he sees SMEs are looking for ways to structure their business such that they require less finance.

Yammouni is creating his own alternatives, hiring former bank staff to help establish finance businesses than can help provide franchisees with the cash to start their own business. He even joked that one day SMEs might not even need the banks.

I’m not sure about that, but I do know you can always count on our smart, flexible and adaptable SMEs finding new ways to grow.