Loan applications were way down last month among small-business owners, according to Banjo Loans’ March Barometer. In fact, they’re at their lowest level this financial year.
Amid an uncertain economic climate, businesses seem cautious to take on more debt; especially those with annual revenues under $2 million. Rising costs and tax incentives (like the instant asset write-off) seems to have made SMes uncertain about reinvesting and expanding.
Many businesses are also still burdened by ATO debts, pointed out Banjo Loans CEO Guy Callaghan.
“Although ATO debt is less of a factor in declined applications, many businesses are still finding it difficult to stay afloat,” said Callaghan.
Arrears also increased last quarter: 20 per cent of SME borrowers are now in arrears.
Some loan activity increase among larger businesses, retail
Among businesses enjoying higher annual revenue, loan activity increased. These businesses increased their borrowing by 6 per cent last quarter.
Retail businesses also borrowed 8 per cent more in the three months to March.
“While sectors like Retail show resilience, others, such as healthcare, education, transport, postal and warehousing are struggling,” said Callaghan.
“Without the right policy adjustments, SMEs will continue to face a prolonged downturn. We must act quickly to help these businesses regain stability, restore confidence and drive recovery.”
