March 2021 Business Finance Update

25 Mar

There's plenty of good business and economic news around:

Govt expands biz loan scheme
Job numbers bounce back fast
New vehicle sales jump 5.1%

Govt makes it easier for businesses to get finance

The federal government has expanded and extended its SME Loan Guarantee Scheme, a program designed to support firms currently on JobKeeper.

Under the new scheme, the government will help eligible businesses apply for loans by guaranteeing 80% of the loan – up from 50% in the original version of the scheme.

The government has also enhanced other parts of the scheme:

Maximum loan size has increased from $1 million to $5 million
Maximum loan term has increased from 5 to 10 years
Maximum turnover of businesses has increased from $50 million to $250 million

The interest rate on loans will be determined by lenders, but will be capped at about 7.50%, although with some flexibility for variable rates to increase in line with market rates.

Loans can be either unsecured or secured, while lenders are allowed to offer borrowers a repayment holiday of up to 24 months.

Eligible businesses will be able to use the scheme to refinance their existing loans.

Job numbers bounce back fast

There are now more Australians in work than before coronavirus, according to the Australian Bureau of Statistics.

Back in March 2020, when the country went into lockdown, there were 13,003,300 people in work. By the end of February 2021, there were 13,006,900 – an increase of 3,600 jobs.

Between March and May 2020, a total of 872,000 jobs were lost. But employment has bounced back fast.

That said, unemployment in February 2021 was higher than March 2020 – 5.8% compared to 5.2%.

Why? Because while there are 3,600 more jobs, there are 78,300 more Australians in the workforce.

New vehicle sales jump 5.1%

Australian businesses and consumers are buying vehicles in increasing numbers, as the economy continues to improve.

A total of 83,977 new vehicles were sold in February, according to the Federal Chamber of Automotive Industries (FCAI):

Total sales were up 5.1% on the previous year
Sales of SUVs, light commercial vehicles and heavy commercial vehicles increased
Sales of passenger vehicle sales fell

FCAI chief executive Tony Weber said the increase in sales volumes reflected increasing confidence.

“During the past four months we have seen an increase of 10.6% in new vehicles and this has been reflected with strong growth in NSW, Queensland, Western Australia, South Australia and the Northern Territory in February 2021,” he said.

“We remain confident that this trend of growth will continue in an environment where business operating conditions continue to normalise.”

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