Classic Liberals is supportive of the concept of government providing a loan to those wanting to establish or invest in a small business but coupling that loan with an ‘equity kicker’, a right to share in the business’ capital appreciation.
Under such arrangements, government will share in the upside but have its downside protected by the entrepreneur having an obligation to repay the loan from his or her future taxable income. The land of the entrepreneur, the USA, provides SBA loans. The arrangement Classic Liberals is considering should be more beneficial to the people of Australia.
Many of those businesses will fail, some will survive and a few will be enormously successful. Loans for university education is similar – some students go on to earn high salaries and create very successful businesses, while many others don’t. Some may never repay their loans.
As with HECS, the amount provided to any individual will be capped.
The challenge is to find a way to implement this program without it driving up inflation.