New data from the Commonwealth Bank of Australia reveals that equipment and machinery financing for small and medium businesses significantly increased in the first six months of FY22 at over 100 per cent compared with the same period in FY21 (87 per cent) and pre-pandemic FY20 (86 per cent).
In particular, demand for equipment financing was highest amongst small and medium businesses in South Australia, with lending up 198 per cent in the state. This was followed by small business owners in Victoria (181 per cent), West Australia (84 per cent) and New South Wales (53 per cent).
“The operating environment has been very challenging for businesses who have navigated protracted lockdowns, the Omicron wave and major weather events,” CBA’s Executive General Manager Business Lending, Grant Cairns, said.
“While many have been cautious, we have seen strong demand for asset financing, largely driven by government incentives and businesses trying to manage supply chain disruptions,” Cairns added. “Businesses – both small and large – are now buying equipment and machinery months in advance in response to supply constraints.”
Cairns added that government incentives like the instant asset write off scheme, available until mid-2023, had provided a boost for Australian businesses.
“After the government extended the instant asset write off scheme last year, we saw a big uplift in financing for vehicles and equipment and expect this to continue into 2023,” Cairns said. “The government-backed SME Recovery Loan Scheme is also available until 30 June 2022 and is an excellent initiative to ensure more businesses can access low lending rates on flexible terms.”
The CBA has also noted that the Australian economy is looking strong in 2022. And as expectations that demand will increase, continued investment in capital goods is being seen to further fuel future growth.
