SME loan applications up 28% YOY: Banjo Loans

Online lender Banjo Loans has shown a 28 per cent increase in loan applications from small- to medium-sized enterprises (SMEs) when compared to the same period last year in its Banjo Barometer report for 3Q24.

According to the report, the year-on-year jump was despite the number of loan applications to Banjo Loans being down across recent quarters.

The report found the surge in new loans was led by applications from SMEs in construction services (59 per cent); healthcare and social assistance (20 per cent); manufacturing (17 per cent); and transport, postal, and warehousing (170 per cent).

Meanwhile, the value of new loans increased by 37 per cent year on year.

Furthermore, the report showed that loans increased over the year for businesses in agriculture, forestry, and fishing; mining; arts and recreation; education and training; information, media, and telecoms; utilities services; professional scientific and technical services; and rental hiring and real estate.

However, loan increases in these businesses came off smaller volumes, the report noted.

The report stated: “The prevailing sense that the next move for interest rates is down – not up – appears supported by business loan activity.

“These green shoots for business activity were sprinkled by a higher quality of applications being submitted.

“Just when we might see rate cuts will be particularly on the mind of retailers, with the sector’s volume of loans on the slide and arrears continuing in the wrong direction.”

The report further revealed that the quality of loan applications has improved quarter on quarter and remained steady on a year-on-year basis despite an increase in application volumes.

Business tax debts continued to be a primary reason for loans being declined as the Australian Taxation Office’s (ATO) charge on recouping outstanding debts persists.

In terms of managing loan repayments, the report stated that SMEs mostly have repayments “under control” as 30-day arrears fell for the majority of industries.

However, the effects of high interest rates on consumer spending have manifested in arrears spiking during this quarter for the retail sector, according to the report.

While quarterly loan amounts registered modest declines in quarterly loan amounts for businesses in NSW and Victoria, there were sizeable year-on-year increases, with loan amounts for Victorian SMEs increasing by 78 per cent and 16 per cent for NSW SMEs.

In Queensland, loan values doubled over the past quarter and increased 246 per cent compared to the same period last year.

According to the report, financing to Queensland SMEs was often used to fund assets, equipment, and infrastructure, along with Western Australia.

South Australian loan values fell on a quarterly and yearly basis, down by 43 per cent and 29 per cent, respectively, while loans to Western Australia fell for the third consecutive quarter by 23 per cent.

Banjo Loans previously reported that 52 per cent of SMEs plan to leverage funding to achieve business goals over the next year, with a growing proportion looking at accessing secured finance in 2024, with this cohort growing to 53 per cent from 45 per cent in early 2023.

[RELATED: More SMEs turning to secured funding: Banjo]

Written by Adrian Suljanovic

Last Updated: 15 April 2024

Published: 16 April 2024