Overall business credit demand fell in the December quarter but asset finance applications were surprisingly strong, indicating that many companies are still investing.
Equifax’s December 2023 Quarterly Commercial Insights report shows that overall business credit applications fell 0.9 per cent in the December quarter, compared with the December quarter 2022.
Business loan applications were down 4.1 per cent and trade credit applications fell 0.4 per cent.
But asset finance applications were up 8.9 per cent, compared with the December quarter 2022.
Equifax general manager commercial and property services, Scott Mason, said demand for asset finance was, in part, a result of the freeing up of supply chains that has made vehicles and equipment more readily available.
“But it also shows that there are businesses doing well and making capital investments,” Mason said.
Business insolvencies in the December quarter were at a five-year high, returning to pre-COVID levels and then some.
Mason said construction, retail and food and accommodation were the hardest hit sectors. “There were 606 construction industry insolvencies in the December quarter, compared with 472 in the December quarter 2022 and 330 in the December quarter 2021.”
He said the numbers reflected the impact of high interest rates and the high cost of living on the economy, as well as the belated washing out of the “zombie businesses” that were able to keep going thanks to COVID stimulus.
“There is a bit of catch-up in these numbers,” he said.