While there can be many joys of small business ownership, small businesses also deal with many potential perils.

Login or signup to continue reading

Access to finance is one of the double-edged levers for small business success. Finance is the "oxygen of enterprise" - too much and people can go silly; too little and growth, vitality and survivability are impaired. Without finance, scaling up or building a business from scratch is near impossible. But the risk of accessing finance without adequate protections is one of the most nefarious threats to small business, driven by the bad behaviour of dodgy or predatory lenders or "fringe financiers" .

For small business, there is a really valuable feature of the financial services regulatory and safeguards framework - the Australian Financial Complaints Authority (AFCA).

AFCA provides free, fair, and independent dispute resolution for financial complaints, including for small businesses where they have grievances with participating financial service providers.

This is reassurance for small business borrowers who know that if an issue arises and a resolution can't be worked through with the lender, the borrower can turn to AFCA.

But not all lenders to small business are part of the AFCA dispute resolution scheme. For AFCA to be able to help, the financial firm needs to be an AFCA member and agree to the jurisdiction of its scheme. That's why the AFCA sign matters.

AFCA recently reported that complaints from small businesses hit a record 4648 last financial year, up 4 per cent on the previous year. Alarmingly, a large proportion of the 21 per cent of finance-related complaints could not be considered because the lender was not an AFCA member.

That's where ASBFEO comes in. Non-AFCA small business lending grievances can come to us where we will seek to facilitate a resolution, just as we do for broader business-to-business disputes.

But unlike AFCA, ASBFEO is not empowered to make a binding determination.

For small businesses, there are many reasons why access to funding is needed. About 40 per cent of the business-to-business disputes ASBFEO assists with involve payment disputes - small businesses just wanting to be paid for the goods and services they have provided. A growing number of small businesses who turn to ASBFEO for payment dispute assistance are worried that the........

© Canberra Times