SME credit demand improves, lenders, begin the next phase of COVID-19 support

With just 5% of deferred business loans yet to restart repayments, things are starting to look up for small business owners throughout the country. Meanwhile, there is evidence that the demand for business credit is improving, particularly in asset finance.

The first piece of information comes from the Australian Banking Association (ABA), which indicates that just 11,263 business loans have yet to restart repayments across the country.

That’s a significant decrease from the peak of the pandemic in June when over 200,000 small business loans were deferred.

With automatic loan deferrals no longer available, borrowers who are unable to make reduced repayments or restructure their loans will be assisted by specialized hardship teams in the coming months.

Banks have established an industry-wide, consistent approach to hardship, as well as a new online assistant center to advise clients in financial distress and promote transparency, as part of this support.

“Regardless of who they bank with, customers can expect a thoughtful and empathetic response with clear and honest answers,” said ABA CEO Anna Bligh.

Demand for credit is increasing.

Another encouraging indicator for business confidence across the country is that credit demand is improving, particularly for asset financing.

While business loan applications were down 10.1 percent from the previous quarter, the rate of decrease has slowed, according to Equifax’s Quarterly Business Credit Demand Index for the December 2020 quarter.

Victoria saw a 7% increase in applications in December 2020 compared to the September quarter, followed by Queensland and Western Australia (+5%).

Even better, asset loan applications were up 0.2 percent compared to the same time last year.

“While overall business credit demand is still low, there are hints of a comeback,” says Scott Mason, General Manager Commercial and Property Services at Equifax.

“The lifting of prolonged limitations in Victoria will have resulted in a surge in asset finance business credit applications”

How does 2021 look for your company?

Please get in touch if you’re starting to feel optimistic about your company’s prospects in 2021 and want to learn more about your financing choices so you can take advantage of any upcoming opportunities.

The federal government’s ‘temporary full expensing’ scheme, which allows enterprises to deduct the business share of the cost of eligible new depreciating assets immediately, is in effect until June 30, 2022.

To learn more about how it might help your company’s cash flow while acquiring assets, contact Premium Finance Group Australia at (07) 4720 8888 or email us at finance@pfga.com.au

 

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