Regional Australia loses many of its University graduates to major urban centres. Graduates hope to obtain jobs that will utilise their skills but this urban drift has important implications for the regions that are left behind. In an effort to alleviate this drift, regional universities have a major role to play in providing knowledge workers and creating the human capital to supply regional and rural employment needs. While a number of studies have been completed on graduate attributes, core skills and knowledges, these studies have also had a strong focus on urban centres and this focus does not contribute to the understanding of regional and rural SME knowledge requirements. This study aims to investigate graduate uptake by regional and rural SMEs, specifically in the Central Queensland region, with the focus being a discussion of perceived barriers to employment of university graduates by SMEs.