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There has been a 15 per cent uplift in vehicle and equipment financing from Australian businesses despite a slower economy, according to the major bank.
The Commonwealth Bank of Australia (CBA) has revealed that business appetite for assets has continued to grow strongly, despite economic conditions, creating challenges for small businesses alongside dwindling confidence, ongoing payment disputes, and ATO tax debt burdens.
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According to the major lender, there was a 15 per cent increase in vehicle and equipment financing in the financial year ending June 2024 (when compared to the same period of FY23).
Motor vehicle purchases have been responsible for the majority of this growth, according to CBA, with the major bank finding that car purchases were up 55 per cent.
Green vehicles were in particularly high demand, with loans for hybrid vehicles having increased more than five times (533 per cent) in the past financial year, while finance for electric vehicles was up 254 per cent at the bank.
Light commercial vehicles (such as utes, vans, and light trucks) were also growing strongly, CBA said, increasing by 27 per cent.
CBA said that the growth in vehicle finance may be due to improvements in supply chains following the disruption caused by the COVID-19 pandemic and a swathe of new stock becoming available.
Moreover, the bank said that finance for fitouts had also increased in FY24, with financing for shelving and furniture fittings in commercial premises such as shops and offices up 25 per cent.
Health & community services, education, and manufacturing were the three segments where growth was strongest for this segment.
Noting the findings, Grant Cairns, CBA’s executive general manager, business lending, said: “Australia’s economic fundamentals are sound, and there are reasons for optimism about the future, but inflation and other global risks contribute to uncertainty that’s rightly prompting business owners to take steps to ensure their operations are future-fit and resilient.
“While companies are navigating ongoing pressure from rising cost of doing business, we are seeing many business owners taking the long view on the economy and investing in their operations.”
However, he acknowledged that some businesses were “doing it tough” amid higher cost of living.
“While there are these pockets of strength and optimism across the economy, we know that the economic climate is challenging some businesses more than others, and we have tailored support available for those who are doing it tough,” he said.
According to the EGM for business lending, the bank has been working to support business customers by “proactively” checking in on them to help them understand the support available and improving its service offering.
“We are very focused on ensuring access to capital to help drive productive capacity across the country,” Cairns said.
“For small and medium-sized businesses, this means making it simpler and easier to access funds and we’ve cut our funding time-to-decision by 20 per cent to provide that support faster.”
He said that bank has also worked to automate and digitise its business lending products, including business overdrafts, which are now available to eligible small-business customers via a fully automated online application process.
Several other lenders have been focusing on SME lending growth in recent months, with NAB – Australia’s largest lender to SMEs – having recently said it had seen credit rise by almost 9 per cent in the year to April 2024. It also reportedly saw its strongest pipeline on record in the business bank in March.
NAB expanded its broker support team in the commercial broker segment earlier this month, as the major bank continues to focus on growth in commercial lending.
[Related: Submissions open for brand-new Commercial Finance Awards 2024]
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