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Business Loans Growth is expected to Gain a Steep Hike

May 14, 2015

Monthly business survey done by RBA has shown that the business lending growth increased to a much lower level in the month of April. As per the research done by Bibby Financial Services among SMEs, it has been concluded that despite weak economic conditions and concerns that government policies are not working, SMEs are ready to invest.

The interest rate cut in the last week have fired up the SME sector and brokers should be prepared to take advantage of it.

If we talk about the survey that was performed before the rate cut 72% of medium-size businesses intend to invest in their businesses in the next 12 months. But after the rate cut it is likely that even more SMEs are planning to invest in growth by increasing borrowing, according to Bibby. This survey is signalling that the business loans will gain a steep rise in the coming months.

Mark Cleaver, managing director, Bibby Financial Services Australia and New Zealand said, “The good news is that interest rate cuts are having a positive effect. We have seen an increase in the level of borrowing after several years of below trend growth in business lending. Among businesses that intend to borrow over the next 12 months, 32% said they will borrow to fund growth and more than one in five (22%) will borrow to fund innovation projects. Both indicators have increased from July 2014, which is an encouraging sign, showing businesses are prepared to invest in the future and become more proactive in driving growth”.

News Source: http://www.brokernews.com.au/news/breaking-news/business-lending-to-amp-up-with-low-rates-200196.aspx

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