Businesses in Australia are planning to pull back on their loans and investments in the upcoming year, according to a survey commissioned by Small Business Loans Australia, a business loan comparison site.
“Economic growth in Australia is still below historical trends in the last quarter, so it makes sense that businesses are playing it safe,” said Alon Rajic (pictured), the founder and managing director of Small Business Loans Australia.
“There are a lot of financial pressures in play right now, so many business owners will be waiting to see how the next year pans out before taking on any financial risk.”
The survey found that the majority of Australian business owners will be more conservative in borrowing and investing as the economic growth continues to lag. About 90% of businesses said they will be cautious in borrowing money while 69% will hold off on investments like equipment purchases and new additions to the team. Only 31% will continue to invest in business in 2024.
About 45% of the respondents said that they will spend more time sourcing and comparing the loans that will have the best value for them, while 23% said they will be spending more time in deciding whether they will apply for a loan or not. There were 12% of respondents that said they have ditched their loans after initial enquiries while 10% will look into smaller loans.
Medium-sized businesses are more likely to tighten their budgets in the coming year as 97% aimed to be more conservative in their borrowing compared to 82% of small businesses. They were also more likely to refrain from investing in their business.
Businesses in Victoria are more likely to be cautious in borrowing compared to other states, with 96% saying so. Victoria was followed by Queensland (87%) and NSW (85%). Businesses in Queensland are most likely to spend the time to find a good deal with 54%, followed by Victoria (44%), NSW (36%), and South Australia (31%).
Rajic said that despite the financial pressures brought by the cost of living and higher interest rates, there was still hope to be found as the economy was more resilient than expected. He noted that the federal budget has put measures that supported businesses through difficult economic times.
“The instant asset write-off allowing SMEs to immediately deduct assets is one such measure, and small business energy incentives build on that relief too,” he said.
The survey involved 202 directors and decision-makers across micro, small, and medium-sized businesses.
