This background paper provides information about small and medium-sized enterprises (SMEs) in Australia, and describes some ways that SMEs interact with providers of financial products. This paper also highlights that there is no single definition of an SME in Australia, and that data about SMEs is limited.

The banking royal commission has exposed senior management, boards and regulators to unprecedented scrutiny — and the problems don’t end with the finance sector, writes Michael Gill.

At the request of the Royal Commission, this information note identifies reforms affecting SME lending introduced since 2007. The reforms outlined in this information note primarily concern reforms that are of relevance to small businesses, rather than medium sized enterprises, which are treated consistently with larger enterprises within the regulatory framework.

The scope of this paper is limited to small business credit in the form of loans, both secured and unsecured. It does not consider other banking facilities, financial products or financial services. It is intended to provide an overview of the relevant issues, and does not purport to be comprehensive.

This paper responds to a request from the Royal Commission for background on the capital prudential framework applying to the banking industry, with particular regard to the current and proposed treatment of residential mortgage lending and lending for small and medium-sized enterprises.