Small businesses in Australia have a hard time getting finance. Other countries offer a different solution

Judo Bank, an Australian specialist small-business lender, saw three loans turn bad this week, and investors reacted sharply—its share price dropped forty percent in a single day. The news exposed a persistent problem: Australian small businesses, which make up ninety-seven percent of all businesses and employ over forty percent of the private workforce, struggle to access finance. Most lenders demand collateral, often a family home, even for profitable, growing businesses. In the UK, Germany, France, and the US, governments have stepped in with loan guarantee schemes that share the risk with banks. Per The Conversation, these guarantees have expanded credit for businesses that otherwise couldn't borrow. Australia lacks similar public institutions, leaving most of the risk with private lenders—and requiring most business owners to pledge property they may not have. Without easier access to finance, small businesses invest less, hire fewer people, and grow more slowly.

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