Small business lending exemption gets 2-year extension
The government says the measure is “working well” and improving the sector’s access to finance.
The government will extend the small business responsible lending obligations (RLO) exemption for a further two years in a move aimed at cutting red tape and improving access to finance.
The exemption from responsible lending laws was originally due to expire on Thursday but will now continue until 3 October 2026.
It comes as the government cites positive outcomes from the current policy and seeks to gather more data on its long-term effects, according to a joint statement from Assistant Treasurer Stephen Jones and Minister for Small Business Julie Collins on Tuesday.
“The evidence suggests that the exemption is working well. It is beneficial for small businesses, enables streamlined access to credit, and there is no substantive evidence of harm,” they said.
“Extending the exemption will provide an additional two years of data to inform any future decisions of government.”
The exemption was first introduced in 2020 and allows small businesses to effectively bypass responsible lending obligation assessments that credit providers must apply.
Under the National Consumer Credit Protection Regulations, businesses must make reasonable inquiries about a consumer’s financial situation (and their requirements and objectives), take reasonable steps to verify a consumer’s financial situation, and make an assessment about whether the credit contract is “not unsuitable” for the consumer before entering into credit arrangements.
To be eligible for the RLO exemption, small businesses must have fewer than 100 employees or revenue of $5 million or less in the previous financial year when seeking loans for genuine business purposes.
“This means more businesses can access the credit they need, when they need it,” Jones said.
"Small businesses are the beating heart of our economy. We'll always back small business to provide the goods and services our communities need.”
Collins said access to finance was a critical for small businesses.
“[It] is why this extension is so important,” she said.
She added that this measure was part of a broader government strategy outlined in the Small Business Statement.
“Our Small Business Statement outlines more than $640 million in targeted supports for small businesses to ease pressure, support small businesses to grow, and level the playing field.”
A recent survey by the Australian Chamber of Commerce and Industry found around one-fifth of respondents cited the ability to obtain finance as one of the greatest pressures facing their small business, even with the exemption in place.
“This extension will significantly alleviate the administrative burden on businesses, reduce red tape and streamline the credit approval process,” the ACCCI said in a submission to Treasury in August.
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