As we approach the end of 2024, I’ve been reflecting on the latest data from the Equifax Commercial Insights Report for Q3. The trends we’re seeing this year paint a complex picture for Australian businesses, particularly when it comes to commercial finance. While demand for business loans is on the rise, we’re also seeing a decline in asset finance demand and an increase in credit adversity across key sectors.
At Colossal Finance, we work closely with business owners to help them navigate these financial trends and turn challenges into opportunities. Here’s my take on what the latest data means for you as a business owner and how we can help you make the most of the current landscape.
1. Business Loan Demand Is Growing – But There Are Risks
According to the Equifax data, overall commercial credit demand increased by 0.7% in Q3 2024 compared to last year. This growth is largely driven by a 4.5% rise in business loan demand, with industries like hospitality (+14%) and retail (+7%) leading the charge. While it’s encouraging to see businesses leaning into borrowing to fund growth, it’s essential to be mindful of the risks that come with this increase.
One of the most significant concerns is the rising proportion of adverse credit on business applications. In fact, Equifax reported a 24-month peak in adverse rates across commercial credit, with sectors like hospitality, real estate, and mining being the most affected. For businesses in these industries, managing debt and securing the right finance solutions is more important than ever.
At Colossal Finance, we’re here to ensure that when you do borrow, it’s done in a way that supports your business’s long-term growth and stability. By structuring loans that fit your cash flow and repayment capacity, we can help you avoid the pitfalls of overleveraging while still accessing the capital you need.
2. Asset Finance Demand Is Down – But There’s Still Time to Act
While business loan demand is up, asset finance has taken a hit, with demand falling by 6.8% year-over-year in Q3 2024. This drop is particularly noticeable in key industries like manufacturing, construction, and logistics. A significant factor behind this decline is the lowering of the instant asset write-off threshold, which has made businesses more cautious about taking on large capital expenditures.
That said, asset finance remains a valuable tool for businesses looking to invest in equipment or vehicles without draining their cash reserves. For businesses considering upgrading their assets, now is a critical time to act. With tax incentives still available and the end of the financial year approaching, there’s a window of opportunity to make those purchases while maximizing financial benefits.
At Colossal Finance, we specialize in helping businesses structure asset finance deals that work for them—whether that means upgrading your fleet, investing in new technology, or expanding your operations.
3. Insolvency Rates Are Rising – How You Can Stay Ahead
One of the more sobering insights from the Equifax report is the sharp rise in insolvencies. Insolvency volumes have surged by 43% compared to Q3 2023, with industries like hospitality and construction seeing significant increases. Hospitality, in particular, experienced a 205% increase in insolvencies over the past year, highlighting the ongoing financial strain on businesses in that sector.
These numbers should be a wake-up call for any business owner. Rising insolvencies indicate that many businesses are struggling to manage their debts and cash flow in the face of economic challenges. The good news is that there are proactive steps you can take to safeguard your business.
At Colossal Finance, we’re committed to working with business owners to restructure their finance arrangements, improve cash flow management, and ensure they have the working capital needed to stay afloat. If you’re worried about your business’s financial health, now is the time to act. Don’t wait until it’s too late—let’s explore options to strengthen your business’s financial position before insolvency becomes a risk.
4. Looking Ahead: Preparing for 2025
As we move into 2025, businesses need to be thinking about how to position themselves for success in a rapidly changing economic environment. The data from Equifax shows us that while there are challenges, there are also plenty of opportunities—if you know where to look.
Here are a few key strategies to consider as you plan for the year ahead:
- Leverage Tax Incentives: With the end of the financial year just around the corner, now is the perfect time to take advantage of tax incentives, particularly around asset purchases. Even with the lower write-off threshold, making key investments before the deadline could yield significant tax savings.
- Secure Competitive Financing: With fluctuating interest rates, it’s essential to lock in competitive financing terms now. Whether you’re looking for a business loan or asset finance, securing favorable terms today could save your business money in the long run.
- Focus on Credit Management: The rise in adverse credit rates is a reminder that businesses need to be proactive in managing their credit profile. At Colossal Finance, we can help you assess your current financial situation, manage debt, and structure new financing arrangements that suit your needs.
In Conclusion
The Q3 2024 data from Equifax gives us a clear picture of the challenges and opportunities facing Australian businesses today. While demand for business loans is strong, asset finance is down, and insolvencies are on the rise, there are still plenty of ways to position your business for success in 2025.
At Colossal Finance, we’re here to help you navigate these uncertain times and come out stronger on the other side. Whether you’re looking to secure a business loan, restructure your debt, or invest in new assets, our team is ready to work with you to find the right solution for your business.
Let’s talk about how we can help you unlock new opportunities and take your business to the next level.
.jpg)
