also been tightened. for example, banks have required a greater degree of verification of borrowers'information, and banks have been more cautious about lending to new business customers and to the sectors hit hardest by the pandemic. small businesses have reported difficulties accessing finance for years many of the challenges small businesses face when accessing finance have been around for many years. although i am focusing on the experience in australia, it is worth noting that these challenges are not unique to smes in australia. small businesses, particularly less established ones, tend to be riskier than large, established firms with a track record of profitability. as a result, lenders reject a greater proportion of loan applications from smaller businesses. they also charge more to take on the additional risk associated with the loans that they provide. the terms for the loans may also be more restrictive. for instance, loans to small businesses may often be small relative to the size of the business, or require collateral or personal guarantees. indeed, around 95 per cent of loans to smes are secured – compared with around 70 per cent for large business loans ( graph 4 ). and about half of small business loans are secured by residential property. many small business owners may not be well placed to provide sufficient home equity to secure a suitable loan. graph 4 lending to businesses not seasonally adjusted, break - adjusted $ b small business medium business large business $ b s d m j s d m s d m j s d m s d m j s d m 2020 2021 2019 2020 2021 2019 2020 2021 secured ( other ) secured ( residential property ) unsecured secured sources : apra ; rba small businesses generally have few viable alternatives for external finance outside of traditional intermediated finance. unlike large businesses, it is too costly for them to raise funds directly from capital markets. australian small businesses have made increasing use of non - traditional sources of finance in recent years, such as balance sheet lending and marketplace lending ( graph 5 ). [ 5 ] however, the available data suggest that non - traditional sources of finance accounted for less than 2 per cent of overall sme lending in 2018. graph 5 non - traditional finance transaction volume a $ m a $ m total 1, 500 1, 500 other * 1, 250 1, 250 marketplace consumer lending 1, 000 1, 000 balance sheet business lending * includes balance sheet consumer lending, marketplace business lending, property lending, invoice trading, crowdfunding, and other models sources : cambridge centre

such as electricity and water, as well as transport links, need ongoing investment to accommodate a rising population. this challenge has clearly been recognised and, over recent years, governments at both the state and federal level have been increasing infrastructure investment. as can be seen from this graph, public investment in communications infrastructure has increased with the rollout of the nbn. transport infrastructure – road and rail – has increased even more sharply and is back close to the share of gdp it represented in the years immediately after the global financial crisis. graph 1 https : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 06 - 15. html 4 / 8 6 / 15 / 2018 how infrastructure fits in | speeches | rba the recent federal budget foreshadowed additional infrastructure spending. more broadly, investment by the federal government is projected to increase over coming years. most of the infrastructure spend is by state governments, however. this has already increased noticeably, particularly in the south - eastern states, and according to state budgets it is projected to increase further in the next couple of years. much of this work is in urban transport projects, both road and rail. graph 2 another area of infrastructure attracting substantial investment at the moment is renewable energy. the value of renewable generation projects slated for the next year or so is similar to the average of recent years'investment in electricity generation, distribution and transmission, a much broader total set of activities. most of the investment in renewables is by the private sector. these projects have become more attractive lately as the cost of the underlying technology has fallen. at the same time, the costs of fossil - based inputs to existing generation methods has risen, and so has the price of electricity. so renewable energy projects are becoming increasingly commercially viable. as such, it is an area where the private sector can provide the infrastructure. and that is indeed what we are seeing. a range of data sources on both capital expenditure and financing show greatly increased activity recently ( graph 3 ). a few years ago, much of the https : / / www. rba. gov. au / speeches / 2018 / sp - ag - 2018 - 06 - 15. html 5 / 8 6 / 15 / 2018 how infrastructure fits in | speeches | rba investment in renewables was in small - scale rooftop solar. more recently, as the economics of these projects has changed, we are seeing more large - scale solar and wind projects being financed and built. graph