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Should you be investing in new or upgraded plant and equipment this spring? Your competitors probably are!


Financial stars align this spring


As the weather heats up, the finance market is warming too. Economic conditions and financial incentives are making this spring a good time to consider purchasing new or upgrading existing assets, plant and equipment.


EBM Finance Associate, Elliott Watkins, said there had been some good news for borrowers in recent months, with official interest rates down and business lending on the rise.


“This, coupled with a lift in the small business instant asset write-off, means conditions in the finance market are serving as a catalyst for more activity this spring,” he said.


The Reserve Bank of Australia (RBA) has lowered official interest rates to an historic low of 0.75%, with many lenders following suit and reducing their rates for asset, plant and equipment loans.


“The moves by the RBA on interest rates are having a flow-on effect in the equipment financing landscape. We are seeing the market become more competitive across the financing options, making capital purchases more attractive,” said Elliott.


“Even before the RBA cut official rates for the first time since August 2016 when it lowered the rate 25 basis points in June, lending to businesses was on the up.”


According to figures released by the Australian Bureau of Statistics (ABS), lending to businesses increased 1.5% year-on-year in July. In addition, loan applications for amounts less than $2 million increased 23% in the June quarter.


The positive outlook for lending is also reflected in the fact that banks are approving 94% of business loans for SMEs, according to the Australian Banking Association (ABA).


“ABA chief Anna Bligh has said that banks and lenders have plenty of appetite to lend to small and medium businesses. Together with the record low interest rates, this provides an opportunity for SMEs to raise capital to fund growth opportunities,” Elliott said.


Replacing, upgrading and buying new equipment and machinery is a primary reason most SMEs seek loans.


“Ensuring their equipment keeps pace and is up to the job is a priority for SMEs, and with the instant asset write-off increasing to $30,000 for businesses with a turnover of up to $10 million, there are tax break incentives in the mix too,” Elliott explained.


“The lending and tax environments really are primed to support increased business investment activity, and this aligns with a boost in business confidence which is making pursuing growth strategies through strategic capital purchases a viable proposition for more and more SMEs.”


Roy Morgan’s Business Confidence index showed confidence was up 0.3% in August, with 53.1% saying it’s a ‘good time to invest in growing the business’ and 54.1% expecting ‘good times’ in the Australian economy over the next five years.


“A culmination of factors are converging to create an optimal time for businesses to consider asset, plant and equipment finance,” Elliott said.


“Partnering with a finance broker is a great way to access the best rates and all the financing options from chattel loans to leasing.”


Talk to EBM Finance about asset, plant and equipment funding options to help grow your business.


 EBM Finance Pty Ltd acts as a credit representative of IFBA Pty Ltd under Australian Credit Licence 391682.


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