According to recent research from Metro, an esteemed non-bank commercial asset finance lender in Australia, small businesses will continue to face significant economic challenges.
The survey, which involved 500 business brokers, revealed that 90 percent of brokers anticipate that the number of struggling businesses will either remain unchanged or increase in the upcoming financial year (FY24).
Unsurprisingly, these findings have created concerns among brokers, with over a quarter of respondents believing that an economic recession is very likely in the near future. The survey also indicated that 93 percent of brokers expect borrowers to either maintain the same level of asset purchases or decrease them compared to the previous financial year (FY23).
CEO of Metro, Phillip Crossman, acknowledged the tough conditions facing small businesses and the consequential impact on their customers. However, he expressed some optimism by highlighting a shared belief among brokers that there will be an improvement in supply chain issues throughout the year.
Interestingly, the survey revealed that 90 percent of brokers do not expect supply chain issues to worsen. Furthermore, almost half of this group (45 percent) anticipate a measurable improvement in the supply chain situation.
Despite ongoing challenges such as rate increases and restricted cash flow, small businesses have always been known for their resilience and optimism. In fact, the data shows that despite the Producer Price Index rising by over five percent in the past year leading up to March 2023, more than 11,000 new businesses were established in the first quarter of 2023.
Furthermore, the asset finance industry continues to approve the majority of loan applications. Approximately two-thirds (65 percent) of brokers reported no increase in prime asset finance borrowers being denied the loan amount they were seeking. This indicates that lenders are still supportive of small businesses and their financial needs.
While the future may present challenges, small businesses are adapting and finding ways to navigate the tougher economic climate with their characteristic determination and resourcefulness.
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