January 2021 Business Finance Update
There's plenty of positive business news at the moment:
Businesses feeling bullish
Most popular cars revealed
Big fall in interest rates
Business loans back on track
Read more below.
Business finance interest rates fall to record-low levels
Getting a business loan to buy a new asset or finance expansion has never been cheaper, according to data from the Reserve Bank of Australia and APRA.
Interest rates for business loans fell about 1 percentage point between September 2019 and September 2020.
As always, size matters, with the average big business paying about 3 percentage points less in interest than the average small business.
Here are five reasons why now might be the perfect time to take out a business loan:
Interest rates are at record-low levels
Lenders are keen to finance viable businesses
Business confidence is above pre-Covid levels
The economy is growing and unemployment is falling
The instant asset write-off was raised last year to $150,000
Australian businesses in bullish mood
Business confidence has reached its highest level in almost three years after enjoying a record-breaking surge.
In December 2020, the Roy Morgan Business Confidence index jumped 14.1 points to 123.2, which was the highest monthly reading since January 2018.
More remarkably, confidence jumped 37.6 points from September to December – the biggest quarterly increase in the survey’s history.
Business confidence is not only above pre-Covid levels – it’s also above the long-term average of 113.4 points.
Business confidence is now positive (above 100) in five of the six states:
NSW = 128.2 points
VIC = 124.1 points
WA = 122.8 points
QLD = 117.0 points
SA = 101.4 points
TAS = 88.7 points
Toyota HiLux, Ford Ranger and Toyota RAV4 selling in droves
Sport utility vehicles (SUVs) and light commercial vehicles (LCVs) dominated the top 10 list of most popular vehicle models in 2020.
There were 916,968 new vehicles sold in 2020, according to the Federal Chamber of Automotive Industries.
Vehicle sales for 2020 were down 13.7% on the year before, due to Covid.
However, sales for December 2020 were up 13.5% on December 2019, pointing to increasing business and consumer confidence.
Vast majority of business loans now being repaid
Australian businesses are continuing to get on top of their loan commitments, according to new data from APRA.
Just 2.4% of all loans to small and medium enterprises (SMEs) were deferred in November – well down on the 18% figure recorded in May, at the height of the Covid crisis.
Looking at the state-by-state breakdown, Victoria has the most business loan deferments, while South Australia has the fewest.
Business loan customers are doing better than home loan customers, with 2.8% of mortgages on pause in November.
You might be wondering how to get working capital for your business or how to secure finance to buy an asset such as a car or machinery. If so, please don't be afraid to get in touch with me.
Thanks for reading. Please get in touch if you need help.
Disclaimer: The advice provided in this article is general advice only. It has been prepared without taking into account your objectives, financial situation or needs. Before acting on this advice you should consider the appropriateness of the advice, having regard to your own objectives, financial situation and needs. We encourage you to consult a finance professional before acting on any advice provided in this article or on this website.
