New research released by non-bank commercial asset finance lender Metro has determined that small businesses will continue to bear the brunt of economic pressures.
Metro’s survey revealed that 90 per cent of brokers believe the number of struggling businesses will remain unchanged or increase in FY24, with more than a quarter of the brokers surveyed believing an economic recession is very likely in the near future. In addition, 93 per cent of brokers expect borrowers to buy the same amount of assets, or less, in the next financial year, compared to FY23.
“Our brokers specialise in developing close relationships with their customers, so they know how tough it is for smaller businesses at the moment,” Metro CEO, Phillip Crossman, said. “That said, the silver lining is a shared view that supply chain issues will continue to improve throughout the year.”
Despite recession worries, 90 per cent of brokers believe that supply chain issues will not worsen this year. Furthermore, of the 90 per cent, 45 per cent are anticipating a measurable improvement in the supply chain situation.
It has been noted that in the March quarter of 2023, more than 11,000 new businesses were established, despite the Producer Price Index rising by over five per cent in the past twelve months to March 2023.
Additionally, the asset finance industry is still approving the majority of loan applications, with 65 per cent of brokers reporting no increase in prime asset finance borrowers being turned away for the loan amount they are seeking. In general, brokers are expecting their customers to continue to borrow, despite the economy’s fragility.
“The prime SME sector in Australia is made up of resilient borrowers which are adaptable to market conditions,” Crossman said. “The assets they finance are income producing assets, not discretionary items, and therefore payment is prioritised to enable the borrower to continue their operations.”
