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Overall business credit applications grew by 3.1 per cent in the September quarter despite economic volatility, Equifax has revealed.
A strong uptick in asset finance demand led to an overall increase in business finance applications according to the latest Equifax Quarterly Commercial Insights — September 2022 report.
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The index, which measures the volume of credit applications for trade credit, business loans, and asset finance, found that business credit demand has increased 3.1 per cent year-on-year in the September quarter, returning to growth following a dip in Q2.
The greatest demand for business credit came from businesses in NSW (up 9 per cent) and the ACT (up 8 per cent), followed by Victoria (up 3 per cent), and the Northern Territory (up 1 per cent).
However, demand declined in Western Australia (-6 per cent), South Australia (-1 per cent), Tasmania (-1 per cent), and Queensland (-1 per cent).
Asset finance
According to the latest report, asset finance grew 5.2 per cent, the largest of the three loan segments.
NSW was once again leading the charge for asset/equipment finance demand, with applications up 19 per cent in the eastern state.
Victorian businesses also drove strong asset finance demand with applications ticking up 10 per cent in the southern state when compared to the same period last year, while demand in ACT was up 6 per cent.
All other states saw a decrease in demand, with Western Australia once again noting the largest falls (down 16 per cent). Asset finance applications in South Australia dropped 11 per cent, while Tasmania saw an 8 per cent drop compared to last year, followed by the NT (down 8 per cent) and Queensland (down 4 per cent).
Business loan applications
Business loan demand rebounded across all states compared to the same quarter last year, up 2.6 per cent overall.
The ACT and NT both led the charge for growth in business loan demands, up 6 per cent when compared to last year, with NSW closed behind with a 5 per cent uptick.
Tasmania was up 3 per cent, followed by South Australia (+2 per cent), Victoria (+2 per cent), Queensland (+1 per cent), and Western Australia (+1 per cent).
Trade credit applications
The smallest growth in business finance applications was in trade credit.
According to Equifax, these were 2 per cent higher in Q3 2022, driven by a whopping 19 per cent increase in demand in the ACT and 11 per cent growth in NSW.
South Australia was the only other state to experience trade credit application growth (+4 per cent), while Western Australia experienced the largest decline in trade credit demand, down 9 per cent.
Applications for trade credit in the Sunshine State were down 3 per cent, followed by Tasmania (-2 per cent).
Demand was flat in Victoria and NT.
Speaking of the figures, Equifax’s general manager commercial and property services, Scott Mason, said: “Businesses are operating against a considerably different backdrop this year, when compared to the same quarter in 2021.
“Last year, several states including NSW and Victoria were in the midst of the Delta variant lockdowns. As a result, much of the growth in business credit demand is being led by these states.
“We’re also seeing industry-specific trends that reflect the changing business conditions year-on-year,” flagging that demand for trade credit in the accommodation and food services industry increased 14 per cent this quarter.
“This suggests these businesses, which were some of the hardest hit during Covid, are taking on credit to rebuild or shore up their operations ahead of the upcoming Christmas period.
“Consumer demand continues to outstrip supply when it comes to construction, which is why we are seeing healthy asset finance growth for this sector — up 8 per cent year-on-year. However, these demand figures don’t mean that construction operators are out of the woods, as insolvency rates in the sector continue to rise.”.
The Adviser’s free SME Broker Bootcamp 2022 will unpack how brokers can take advantage of the growing demand for business credit by diversifying into SME lending, finding new SMEs beyond their database, and sharpening the business value of their brokerages.
It will take place in the following locations:
- Thursday, 17 November: Waters Edge, Portside Wharf, Brisbane
- Tuesday, 22 November: Parkroyal, Parramatta, Sydney
- Thursday, 24 November: Crown Promenade, Southbank, Melbourne
Places are limited so book your place now by registering here.
For more information about the conference, including agenda and speakers, click here.
[Related: Diversification more important now than ever, says business coach]
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