Slowing economy not deterring SMEs from asset investment

Businesses are maintaining their investment momentum despite the slower economic climate, with the Commonwealth Bank of Australia’s (CBA) business bank reporting a 15 per cent increase in vehicle and equipment financing compared to the same period last year.

Motor vehicle purchases have been a significant contributor to this growth, surging by 55 per cent as supply chains improve and new stock becomes available.

Within this category, loans for hybrid vehicles have skyrocketed by 533 per cent over the past financial year, while financing for electric vehicles has risen by 254 per cent.

Financing for light commercial vehicles including utes, vans, and light trucks – which are particularly popular among small-business customers – has increased by 27 per cent.

In addition to vehicles, businesses are investing in shop and office fitouts, with financing for shelving and furniture fittings up by 25 per cent.

The data also highlights strong financing activity in several sectors: health & community services has seen an increase of 35 per cent, education is up by 24 per cent, and manufacturing has grown by 18 per cent.

“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,” said Grant Cairns, executive general manager, business lending at CBA.

“While companies are navigating ongoing pressure from rising costs of doing business, we are seeing many business owners taking the long view on the economy and investing in their operations.”

More small businesses turning to non-banks for investment opportunities

A shift in SME’s approach to funding was recently revealed in the latest SME Growth Index Report released by ScotPac.

The report found that 90 per cent of Australian SMEs are now open to partnering with non-bank lenders, revealing a stark increase from 2018 when only 44 per cent were willing to consider such options.

This marks a sharp contrast to 2014, when only 7 per cent of SMEs sought lending solutions outside traditional banks.

The report found a record 52 per cent of SMEs plan to use non-bank lending for new business investments, surpassing the 42 per cent that intend to rely on bank loans.

Additionally, 59 per cent of SMEs are set to invest in their businesses over the next six months, maintaining the levels seen in 2023, but down from the peak of 65 per cent recorded in September 2019.

[RELATED: Aussie SMEs embrace non-bank lenders for investment]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.