Business credit demand set to slump - report

"We can't consider ourselves out of the woods yet," despite quarterly uptick

Business credit demand set to slump - report


By Micah Guiao

Business credit demand continued its upward trajectory well into Q4 2021 – the uptick driven by the strong performance of business loan applications during its third consecutive quarter of growth, according to Equifax’s latest Quarterly Consumer Credit Demand Index.

Scott Mason, general manager for commercial and property services at Equifax, said the past three quarters had been uplifting to note, but he exercised caution from being overly optimistic.

“It’s encouraging to see business credit demand trending upwards over the past three quarters, but we can’t consider ourselves out of the woods yet,” Mason said. “The impacts from the Omicron variant were minimised due to seasonal low demand in December, but are likely to be seen in Q1 of this year. Already in the first two weeks of January, commercial enquiries have fallen sharply, although the severity of the drop seems roughly in line with seasonal expectations.”

Overall, business credit applications were up 9.7% in the December 2021 quarter compared to the same quarter in 2020 with business loan applications pulling it up by 19.6% compared to Q4 2020, and by 12.0% compared to the same pre-pandemic quarter in 2019.

All states except Western Australia and Northern Territory saw an increased demand for business credit, with the highest recorded in Victoria and Queensland.

Meanwhile, demand for business loans in the accommodation and food services sector saw a significant increase, up 33% in Q4 2020 and 11% in the same quarter of 2019. The retail trade sector also saw an 18% rise in demand for business loans in Q4 2020.

“The rise in business loan demand in the food service, accommodation and retail sectors suggests that, after two challenging years, business owners are looking to re-enter these industries or revitalise existing businesses. While this is a positive sign, the impacts of the Omicron spike, including staff shortages and consumers’ self-imposed lockdown behaviours, may have a negative influence on the recovery of the hospitality and retail sectors,” Mason said.

Meanwhile, asset finance applications went down by 3.5% in the December 2021 quarter due to supply chain pressures, but New South Wales and Victoria remained close to the demand levels of the previous pre-pandemic years.


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