SMEs are cautiously optimistic about the future, according to the Australian Banking Association’s Small and Medium Enterprises Lending Report.
The report, which surveyed businesses throughout the country, found an increase in the average value of loans in the year to July:
- Small business loans rose from $2.9 million to $3.4 million
- Medium business loans rose from $12.7 million to $13.1 million
The report also found that of the SMEs that expected to take out loans over the next three months, 54% said their main reason was for cashflow or working capital. That compared to 65% the year before, suggesting cashflow problems eased during that time.
The other top 5 reasons SMEs reported for taking out loans as of August 2022 are:
- Purchase of plant, machinery, or equipment 27%
- Fund merger / acquisition 19%
- Fund growth in Australia 15%
- Fund growth into new markets 9%
- Trade finance to fund import / export activity
Meanwhile, the average SME reported higher turnover than before the pandemic.
“Consumer confidence remains weak, but consumer behaviour tells a different story with retail spending continuing to grow, despite increasing inflation,” according to the report.
“Heading into 2023 we expect SMEs to grow progressively confident. The sector will play an increasingly important role in the health of the Australian economy as it grows and creates employment opportunities for more and more Australians.”
Another main reason why SMEs are cautiously optimistic about the future is because banks and the government are working together to support the re-emerging economy. Banks offer lending to SMEs to allow them to bounce back from the economic constraints during the lockdowns, buy new equipment and hire staff.
Meanwhile, on the real estate side of the economy, real estate prices declined in the year to November 2022, according to a previous post. But based on the forcast of SQM Research, it will rise again in 2023.
With this in mind, if you are planning on buying your own property whether as a home or as a rental property, it is worth doing it earlier in the year than later. This is to take advantage of lower property prices. If you’d like more information, please contact us and we”ll be happy to discuss your plans.