Dynamic Business Logo
Home Button
Bookmark Button

Business credit demand down 5.7 percent

Veda Advantage’s Business Credit Demand Index, released today, indicates many small-to-medium sized businesses (SMEs) remain reluctant to take on credit throughout 2010, with demand falling 5.7 percent in the July to September period over the same quarter in 2009.

business creditHamish Osborn, Head of Commercial Risk at Veda Advantage, said SMEs have adopted a cost-saving attitude this year.

“Given the high cost of raising capital in the current market, many small to medium sized businesses are focusing on cost containment and growing existing business, rather than embarking on aggressive new customer acquisition strategies and other forms of business innovation,” he said.

Monthly analysis of Veda Advantage’s commercial credit bureau saw business credit demand fall by 2.1 percent in July, 10.2 percent in August and 2.4 percent in September year-on-year. This followed a 5.6 percent fall in the April to June quarter year-on-year.

Mr Osborn said the end of the Government’s economic stimulus package appears to have caused a 10.7 percent reduction in demand for asset finance, over the first nine months of 2010 compared to 2009.

“This may indicate many businesses are maintaining conservative and short-term views of credit management and are concentrating on maximising cash-flow in the current climate.

“There are some positive signs emerging following a dip in August around the federal election. The September business credit demand figure is the closest to the same month in 2007 than any month in 2010, so demand levels may be showing the first signs of returning to pre-GFC levels,” he said.

What do you think?

    Be the first to comment

Add a new comment

Paul Hayman

Paul Hayman

Paul is a staff writer for Dynamic Business online.

View all posts