More than $1 billion in contracts for First Nations businesses have now been supported through Indigenous Business Australia's personal bonds.
Since Indigenous Business Australia (IBA) first introduced the performance bonds in 2018, the IBA now supports more than 500 bonds valued at almost $60 million with contracts valued at over $1 billion.
A performance bond is issued to one party of a contract as security against the failure of the other party to meet the obligations specified in the contract. Banks often require a 100 per cent cash deposit as security for the bond, which ties up considerable amounts of working capital.
IBA assists First Nations businesses by issuing bonds directly to the buyer, in cases where the company may not have the required level of security to provide a bond facility for their contracts.
Indigenous-owned and operated Mine Power Solutions pushed the contract value passed the billion-dollar mark recently after winning contracts at Olympic Dam in South Australia.
Mine Power Solutions managing director, Cameron Buzzacott, who was one of IBA's first bond customers through his other venture Zancott Knight, said the bonds were pivotal for both companies.
"In mid-2018, Zancott Knight strategically decided to collaborate with IBA, transitioning away from our traditional banking institutions for bond requirements," he said.
"Being IBA's first client, this bond was pivotal for both companies. For Zancott Knight, it was a turning point as it not only streamlined the process of bond origination but also freed up working capital to grow our business."
Mr Buzzacott said the bonds allowed the company to strengthen their market presence and go after more projects.
He said the bonds also enabled Zancott Knight to navigate the competitive landscape with confidence and agility.
"We are honoured to have partnered on two major milestones, from the first bond in 2018 with Zancott Knight to the bond with MPS that tipped the $1 billion threshold in 2024."
IBA chief executive Kirsty Moore said IBA's Performance Bond Trust had assisted First Nations contractors to participate in a wide variety of contracts including mining, civil works, construction, facility upgrades and renewable energy construction by guaranteeing their capacity to complete projects while requiring minimal security.
"We're extremely proud of this milestone figure – it ultimately contributes to Aboriginal and Torres Strait Islander business growth which is positive for everyone," she said.