lending to smes has been little changed since the onset of the pandemic ( graph 2 ). indeed, sme lending has been around its current level for the past few years. aside from lending to the agricultural sector, which increased throughout much of 2020, lending has been flat for smes across the board ( graph 3 ). but lending to smes in those industries most adversely affected by the pandemic has been low for some time. in contrast to smes, lending to large businesses increased sharply in march and april last year, as those businesses drew upon sizeable lines of credit. large businesses have since repaid these funds, though outstanding lending remains a bit above pre - pandemic levels. graph 2 lending to business * $ b $ b large business medium business small business j a s o n d j f m a m j j a s o n d j f * data cover financial institutions with $ 2 billion or more in business credit sources : apra ; rba graph 3 lending to selected industries small and medium - sized businesses, credit outstanding $ b highly affected by covid - 19 * less affected by covid - 19 * $ b rental agriculture other highly affected * * other services * * * accom & food construction admin healthcare s d m j s d m s d m j s d m * highly affected industries had the highest share of businesses report a fall in revenue of greater than 50 per cent in a june 2020 abs survey ; less affected industries are the top four by value of sme lending * * education & training ; arts & recreation ; information media & telecoms * * * other services includes a broad range of personal services, selected repair and maintenance activities and private households employing staff sources : apra ; rba there has been little change in total sme lending over the past 12 months for several reasons. in part, it reflects the reluctance of some businesses to take on more debt in a weaker and more uncertain economic environment. at the same time, many businesses, including smaller ones, have been able to make use of government and private - sector measures designed to support business cash flows. this reduced the need for many businesses to access external finance, which is more expensive than a business's own internal funds. another factor weighing on lending is a more cautious approach by banks in deciding whether to finance small businesses. much of this has reflected the application of pre - existing lending standards in a weaker economic environment. but lending standards have

for alternative finance ; rba programs to mitigate financing problems for smes during the pandemic it was expected that the difficulties smaller businesses face in accessing finance would worsen during the pandemic. so a range of policies were put in place to support the provision of low cost finance to small businesses. the reserve bank introduced a package of monetary policy measures at the onset of the pandemic. these have helped to reduce the costs of finance to historically low levels, and have been supporting the supply of credit to businesses and strengthening household and business balance sheets. the term funding facility ( tff ) provides low cost term funding to banks. it includes incentives for banks to increase their lending to non - financial businesses, especially smes ; for every dollar of extra lending to smes, a bank is allocated a further 5 dollars of low cost funds from the tff. a range of banks have expanded their lending to smes and benefited from these additional allowances under the tff ( graph 6 ). graph 6 tff allowances $ b $ b a m j j a s o initial * additional ( large business ) n d j f m additional ( smes ) supplementary * represents final usage from october 2020 onwards, as the drawdown period for the initial allowance closed on 30 september 2020 sources : apra ; rba the government also introduced a range of significant measures to support business cash flows and balance sheets. policies such as jobkeeper, boosting cash flow for employers and enhanced tax incentives for investment have reduced costs for businesses, increased household disposable income and supported aggregate demand more broadly. they have preserved employment relationships between firms and employees, and have helped otherwise viable businesses stay afloat when their revenues were markedly reduced by covid - 19 restrictions. these measures reduced the need for many businesses to borrow. this accords with abs surveys conducted in both october last year and february this year, in which most businesses indicated that they had sufficient funds and did not need additional finance. similarly, late last year, non - financial companies had built up cash buffers that could cover nearly 6 months'worth of expenses, an increase of around 30 per cent compared with before the pandemic. unincorporated businesses had increased their cash buffers by 20 per cent to a little over 2 months'worth. other measures associated with the pandemic have been introduced to support the supply of credit. this includes the australian government's $ 15 billion structured support fund to help smaller lenders