Positive news for SME’s – RLO exemption extended to 2026
October kicked off with great news for Australia’s small business (SME) community. The federal government has extended the small business exemption from Responsible Lending Obligations (RLO), meaning small businesses will continue to enjoy streamlined access to credit for mixed purpose loans (both personal and commercial) when when they need it, without being assessed against the RLO, for a further two-years.
“Small businesses will continue to enjoy streamlined access to credit when they need it.”
This exemption is applicable for mixed purpose loans (for example, where a small business or sole trader applies for a single loan that may have both personal and commercial benefits) so long as the there is a genuine business purpose that is not minor or incidental. This genuine business purpose test is a lower threshold than the usual requirement for the ‘predominant’ purpose of the loan to be business-related for RLO requirements under the National Credit Code not to apply.
The RLO exemption is a plus for small businesses and the brokers they partner with, making it less onerous to secure loans or credit, as long as the funding is for genuine business purposes.
Why the exemption?
By way of background, the government initially introduced the small business RLO exemption during the COVID pandemic as a means of encouraging small business investment and growth.
The exemption was later pushed out until October 2024.
“Evidence suggests the RLO exemption is working well, with “no substantive evidence of harm”.
However, the Federal Treasury has again extended the exemption saying the evidence suggests the RLO exemption is working well, with “no substantive evidence of harm”[1].
By extending the exemption the federal government will be able to collect an additional two years’ worth of data to inform future decisions.
Which small businesses are eligible?
Cameron Poolman, CEO of OnDeck Australia, explains, “For the purposes of the exemption, a small business is one that has fewer than 100 employees or revenue of $5 million or less in the previous financial year.”
“It ensures business owners – and the brokers they rely on – are readily able to secure the finance needed…”
He adds, “Australia’s 2.5 million small businesses play a critical role keeping our economy ticking over, so the extension of the RLO exemption is great news for small enterprises.
“It ensures business owners – and the brokers they rely on – are readily able to secure the finance needed to fuel business growth and expansion.”
The RLO exemption extension is welcomed by OnDeck, who’s sole purpose is to provide essential funds to help support Australian small business continue to thrive.
“With access to fast and flexible business loans from $10,000 to $250,000, partnered with our simple application process, businesses can be confident that we’re on their side, always. Our success is aligned with theirs.”
Support for small business, including yours
The RLO exemption extension coincides with the start of the NSW Government’s Small Business Month running from 1-31 October 2024. The program offers small businesses the chance to attend events tailored to their interests across eight NSW regions, providing great networking, skill-building, and learning opportunities.
Small businesses, including yours, can explore more support, grants and services for small business on the Government’s Small Business Hub.
To find out how we may be able to support you and your small business clients, , reach out directly to our team, email broker@ondeck.com.au or call us on 1800 676 652.
Things you should know
This article is for general information purposes only. Content may belong to or have originated from third parties and OnDeck takes no responsibility for the accuracy, validity, reliability or completeness of any information
OnDeck cannot give legal, financial or tax advice. Any legal, financial or tax considerations outlined in this document are general statements, and do not constitute legal, financial or tax advice, which applicants are responsible to obtain from an independent advisor.
OnDeck is a commercial credit only lender and is not subject to the National Credit Code (including the responsible lending obligations). All our customers are required to confirm that loans are predominantly for a business or investment purpose and are required to make a declaration to this effect in our Business Loan Agreement.
[1] https://ministers.treasury.gov.au/ministers/stephen-jones-2022/media-releases/albanese-government-extends-small-business-responsible
