Business credit demand increased by 0.7 per cent in the March quarter, compared with the same period last year, according to the latest Equifax Commercial Insights report.
Business loan applications were up 1.8 per cent and asset finance applications were up 0.5 per cent. Trade credit applications fell 3.8 per cent.
This modest growth in business credit demand comes against a backdrop of sharply rising business insolvencies. ASIC figures show that external administrations grew by 36 per cent in the nine months to March, compared with the previous corresponding period.
ASIC reported that business entering external administration reached 7,742 during the first nine months of the financial year and are on track to reach 10,000 by June 30 – a level not seen for more than 10 years.
The construction industry accounted for 27.7 per cent external administrations and accommodation and food services made up 15.2 per cent.
Equifax said its measure of days beyond terms, the average time taken to catch up with late payments, has increased to 6.5 days, with the construction industry reporting the highest average (10.2 days).
Equifax general manager of commercial and property services, Scott Mason, said: “The ongoing growth in insolvencies raises questions about the survivability of many businesses, particularly those, like SMEs and sole traders in construction and hospitality, that are facing financial stress in both their professional and personal lives.”