Credit information and analysis provided by Equifax has measured how the volume of applications for business credit over the September 2020 quarter varied across the country.
The states and territories that remained open for business over the period showed stable or improved demand; with Victoria excluded from the data, business loan applications constricted by just -9.6%, asset finance by -4.6% and trade credit by -6.0%.
However, in Victoria, business loan applications plummeted by -22.2%, asset finance by -30.7% and trade credit by -7.8%; notably, the declining demand for business credit came in at twice that of New South Wale's despite the two state’s comparable market sizes.
Moses Samaha, Equifax executive general manager of customer and solutions, explained that even the states and territories that remained open and thus fared better than Victoria saw varied rates of success over the period.
Queensland’s border closures kept business credit applications in decline, with the -1.19% evidenced in the June 2020 quarter dropping to -6.2% at the end of September.
“Interestingly, despite Western Australia’s protracted border restrictions, business credit demand in this state is showing signs of recovery,” Samaha added.
“This is likely attributed to a lesser reliance on tourism than in the Sunshine State. Border closures in Queensland have placed a heavy toll on businesses reliant on a steady stream of domestic and international visitors."
In Western Australia, there was an improvement in business credit demand; last quarter, the state showed the greatest drop in applications (-11.96% compared to the June quarter 2019), but in September 2020, the decline had contracted by half to just -6.5%.
New South Wales showed stability over the September quarter, with the volume of business credit applications (-9.6%) on par with the previous quarter when Australia’s nationwide COVID-19 lockdown first took place.
Looking forward, Equifax data from October – not included in this index – suggests a continued positive trajectory of credit demand across the country.
Samaha explained, “As the restrictions in Victoria ease, we are seeing an immediate favourable impact on business credit demand, led by asset finance, followed by business loans. The positive signs in asset finance are likely being driven by the re-opening of auto dealers and the instant asset write-off announced in the recent federal budget.”
“We are also seeing a return to pre-COVID business credit demand across many states in October as confidence grows and business opportunities across borders increase,” he finished.
