Business lending growth has been strong this year, providing a positive signal for lenders and the economy generally, but it might be coming to an end.
According to credit bureau Equifax, business credit demand declined in the June quarter, with overall business credit applications in the quarter down 2 per cent year-on-year.
Business loan applications rose 2 per cent in the quarter, compared with the same period last year, while trade credit applications fell 2.3 per cent and asset finance applications fell 9.1 per cent.
“This could reflect decreasing business confidence in the face of rising rates and inflation,” said Equifax general manager commercial and property services, Scott Mason.
Mason said the big fall in asset finance applications may be due, in part, to the ending of instant asset write-offs.
According to Reserve Bank lending data, lenders’ business loan balances increased by 13.2 per cent in the year to June, the highest annual rate of growth since 2008.
The RBA said growth has been driven by lending to medium and large businesses, while lending to small business “has been little changed for some time.”
It said banks have mixed views about whether business lending growth will remain strong.
Equifax also reported that business insolvencies rose 22 per cent in the June quarter, compared with the same period last year. The construction sector was particularly hard hit, with insolvencies rising 69 per cent year-on-year.