While 76% of finance brokers report COVID-19 has negatively impacted their business and are exhibiting similar levels of concern as consumers, sentiment remains strong yet, with well over half (63%) of those surveyed communicating optimism for the future.
The latest FAST Business Lending Index not only provided insight into the March quarter, but included a survey of its broker network over April and May to give shape to how COVID has impacted both business and sentiment; the results revealed widespread anxiety and concern – which was tempered by a silver lining.
While the commanding majority of brokers (69%) expect COVID to continue impacting business conditions negatively into the future, the report also showed FAST brokers expect working capital flows to increase 20% over the next six months as they work to secure funding lines for SMEs.
“Finance and mortgage brokers are proving themselves to be the lifeblood of the Australian small business community and have been providing an essential service to them during these extraordinary times,” said FAST CEO Brendan Wright.
“Accessing finance will be critical for SMEs over the coming months and our brokers are now preparing to help their commercial clients secure working capital so that they can continue operating through this challenging period.”
Notably, the index showed Australia’s financial sector experienced a strong increase in business lending over the first three-months of 2020.
Drawing from data across 24 lenders, business lending for the three months to 31 March was up 13.4% from the same quarter last year and up 30.4% from the December quarter.
“The impact of the COVID-19 virus and social distancing rules to minimise its contagion has been significant for Australian businesses. Many businesses are doing it tough from a cash liquidity perspective and the significant increase in credit demand is a clear reflection of that,” explained Wright.
“However, businesses in certain sectors have been thriving. A sharp increase in the demand for asset finance suggests some businesses are growing, despite widespread reports to the contrary.”
Non-banks such as La Trobe Financial, Liberty Financial, and OnDeck collectively increased their market share to 17% over the March quarter as compared to 10% a year earlier, largely driven by asset and equipment finance.
Wright foresees brokers to play an important role in rebuilding Australia’s business community.
“Brokers have the chance to make a real difference to businesses and the lives of the people operating them,” he said.
“This crisis will not last forever. We will move through it and brokers will be there to stand by their customers.
“In these extraordinary times. human interaction with a trusted adviser is what clients need more than anything and they will be turning to brokers to help them," Wright concluded.