Business credit applications fell by 2.0%, according to the Equifax Quarterly Commerical Insights report for the June quarter.
The number of business loan applications actually rose 2.0%, however, trade credit applications fell 2.3% and asset finance applications fell 9.1%.
As a result, overall business credit applications has fallen by 2.0%, which was the first decline in five quarters, marking the end of a period of sustained credit growth in this space.
Equifax’s general manager of commercial and property services, Scott Mason, said business credit demand was relatively strong in April and May, before falling away in June.
“This could reflect decreasing business confidence in the face of rising rates and inflation, and may be a forerunner to lower demand in Q3,” he said.
Speaking about the significant drop in asset finance applications, Mr Mason said this was the first year since 2019 that businesses haven’t had access to the instant asset write-off.
“As a result, many businesses likely purchased assets over the past two years that don’t need to be replaced or upgraded, and the fall in applications this quarter reflects this,” he said.
According to the Australian Bureau of Statistics, nearly half (46%) of all businesses have experienced increases in their operating expenses.
To add to this, another key figure highlighted by the ABS is that 41% of businesses faced supply chain disruptions, which could be leading to delayed delivery of goods and services and therefore delayed revenue.
These factors could also be contributing to the declining business credit applications.
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