Treasury has released for public consultation an exposure draft of the Australian Business Securitisation Fund Bill 2018 and explanatory materials, and investment mandate for the Australian Business Securitisation Fund (ABSF).
The ABSF will be established to invest in warehouse facilities and securitisations backed by small and medium enterprise (SME) loans, providing additional funding to smaller banks and non-bank lenders to on-lend to SMEs on more competitive terms. It will be administered by the Australian Office of Financial Management.
The Bill establishes the ABSF and the ABSF Special Account and credits the ABSF Special Account with $2 billion between 1 July 2019 and 1 July 2023.
The ABSF special account will be credited with $2 billion between 1 July 2019 and 1 July 2023.
If the Bill is passed the $2 billion will be credited to the ABSF as follows:
• $250 million on 1 July 2019;
• $250 million on 1 July 2020;
• $500 million on 1 July 2021;
• $500 million on 1 July 2022;
• $500 million on 1 July 2023.
The ABSF is aimed at boosting competition in the SME lending market and improving access to, and the price of, finance available to these businesses.
To be eligible the underlying loans should not predominantly relate to businesses with a primary purpose of investing, such as superannuation funds.
Investments where the underlying loans are made by the major banks (defined as banks subject to the Major Bank Levy Act 2017) and their subsidiaries are not eligible for the Fund. The banks subject to the Major Bank Levy Act are the four major banks and Macquarie.