Access to capital, red tape and energy prices are the main barriers to investment, a study by the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) has found.

Speaking at the Institute of Public Accountants national conference on the Gold Coast, Ombudsman Kate Carnell said removal of barriers to investment would give small businesses confidence to grow and boost jobs.

Ms Carnell said although bank executives have recently claimed that lending to small firms is booming, this wasn’t the case for borrowers who don’t have equity in property.

“Traditional bank loans are backed by real property mortgages and although alternatives are emerging, they are not currently mature and affordable,” she said.

“Young aspiring small business operators are particularly disadvantaged and increasingly rely on their parents to provide seed finance.”

Ms Carnell said this meant the “Bank of Mum and Dad” was often called on to help young entrepreneurs, which puts people’s retirement savings at risk.

“It also raises social equity issues in that the children of affluent parents have greater opportunities to buy and grow businesses.”

Ms Carnell said a government-backed guarantee scheme could be the answer, similar to the British Business Bank.

The Ombudsman’s study also takes aim at red tape, saying past reduction efforts have largely been “window dressing”.

Ms Carnell cited a successful pilot program in Parramatta where information provided once was used to automatically complete forms in other areas of bureaucracy.

“It was found there were more than 50 pieces of regulation which applied to setting up a hospitality business in Parramatta and that the regulation meant it took up to 18 months to commence trading,” she said.

“This is a smart way of using systems and technology to relieve regulatory burdens on business.” 

Download the ASBFEO paper here.