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Small-business loans spiked during the first quarter of the financial year, the non-bank lender’s new research has found.
Non-bank lender Banjo Loans’ inaugural Banjo Barometer has found a surge of 40 per cent in loan applications from small- to medium-sized enterprises (SMEs) during the first quarter of the financial year 2024, driven by manufacturing (21 per cent), retail (7 per cent) and transport businesses (6 per cent).
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The barometer found that loan applications were 30 per cent higher based on volume in 1Q24 when compared to the same period last year.
However, loan applications fell across the wholesale trade, accommodation and food services and financial and insurance services industries, down by 16 per cent, 11 per cent and 10 per cent, respectively.
Furthermore, the barometer found that SME lending spiked by 200 per cent in South Australia, while the number and size of loans decreased in NSW, Western Australia and Victoria.
Banjo Loans chief executive Guy Callaghan said this spike in applications from manufacturing businesses “was not just being driven by cash flow challenges, but also the need to invest in new equipment and technology to drive improved outcomes”.
“These businesses are looking for new, innovative ways to fund the new equipment like asset financing, which non-banks like Banjo are adept at providing,” Mr Callaghan said.
“SMEs are still seeing opportunities in the current marketplace and it is part of our DNA to help businesses grow where they can.
“The Barometer uses loan data to drill down into what business sectors are growing or struggling so we can understand the challenges and growth prospects facing SMEs in today’s economic climate.”
According to Mr Callaghan, this overall surge in some industries was being driven by two primary elements, that being a challenging economy and more businesses seeking out alternative funding sources.
“We know many of the listed banks have tightened lending in the past two quarters just when SMEs need funding support the most,” Mr Callaghan said.
“The ATO is also cracking down on tax debt, which is creating problems for some businesses, particularly when they have not entered a payment plan.”
ScotPac warns SME brokers of rising wages
ScotPac’s SME Growth Index report found almost 70 per cent of SME owners plan to reduce their intake of new employees due to the cost pressures caused by the national wage increases introduced in July.
From 1 July 2023, the national minimum wage was increased by 8.65 per cent to $23.23 per hour and award rates rose 5.75 per cent.
ScotPac said as a result, wages growth has become the greatest concern for Australian small and medium-sized businesses across the past six months, with many looking to rein in growing costs.
Indeed, the Australian Bureau of Statistics’ (ABS) latest Wage Price Index (WPI) has recorded its highest quarterly rise in the index’s entire 26-year history, rising by 1.3 per cent in the September quarter 2023 and 4 per cent over the year (also the highest reading since March quarter 2009).
[RELATED: What’s worrying your SME clients?]
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