In a statement, Federal Treasurer Josh Frydenberg announced the Commonwealth was committing $100 million to establish the BGF in partnership with other financial institutions to provide equity funding to small and medium-sized businesses.

"The major banks being ANZ, CBA, NAB and Westpac have each agreed to commit $100 million to the BGF. HSBC and Macquarie Group will each contribute $20 million," Mr Frydenberg said.

"Given the impact of the coronavirus on the Australian economy, the BGF will play an important role in supporting the recovery and investing in Australian businesses to create job and increase productivity."

Mr Frydenberg said Mr Hodgman's leadership and experience made him the ideal candidate for the chairman of the BGF.

His remuneration will be $145,000 per annum of which the Commonwealth will pay 18 per cent or $26,100 because the Commonwealth is only an 18 per cent shareholder of the BGF.

Mr Hodgman resigned from Parliament in January this year after almost two decades in politics.

He was first elected to Parliament in 2002 and was premier for six years.

Mr Hodgman has kept a low profile since he retired from politics.

However, just before Easter he took to Twitter to thank "the frontline working to keep us safe". "Never has so much been owed by so many to all of you," he tweeted.

"Governments are doing an extraordinary job to keep us safe."