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June Unemployment Rate – red flag for rate hikes & business operators
. 5 min read
The release of the June 2022 unemployment rate is a sign to business operators of ongoing issues in the labour market and further justification for more and larger interest rate hikes. The Australian Bureau of Statistics, the ABS, compiles and releases the employment figures and provides detailed data on the breakdown of the statistics. In the June reporting period the unemployment rate fell markedly and quite unexpectedly by many, by 0.4% from 3.9% to 3.5%. The June figure represented the lowest Australia unemployment in 50 years. Low rates of unemployment are a major economic goal for governments and something for them to celebrate as confirmation of the success of policy decisions. But in the midst of the economic conditions being faced in Australia, especially for business operators, these latest figures pose cause for concern for many. It increases the probability of further rate rises and signals continuing shortages in the labour market. Further rate rises are already expected, the RBA... Read More
Affordable Business Overdraft in a Rising Cost Climate
. 5 min read
2022 is certainly presenting quite a different set of economic and business circumstances to the previous two years. While the pandemic-related issues of 2020 and 2021 presented business owners with plenty to contend with, the government stimulus measures and record low interest rates were of great assistance to many. With both those supports now not available and inflation and operating costs surging, businesses need to look to other means. Business Overdraft is a traditional and very popular form of business finance which can be used to cover short-term or recurring shortfalls in income and cash flow. Shortfalls and pressure on cash flow is currently being felt and will increase for many operators as prices on goods and services including materials and supplies increase and due to a number of other decisions. We cover off on current cost drivers, how an overdraft may assist, the options in sourcing a Business Overdraft and what other options may also work for an individual... Read More
RBA July Rate Decision – what it means for business finance
. 5 min read
After two months of significant rate rises, all eyes were on the RBA July rate decision. As predicted and pre-empted, the Reserve Bank Board lifted the cash rate by another 0.5% at its meeting on Tuesday 5 July. The RBA July rate decision sees the cash rate at 1.35% and represents a 1.25% increase in just 3 months and a wake-up call for those needing business finance. Significant increases and based on comments by Philip Lowe, Governor of the RBA, July will not be the last rate rise this year. The recent rises in the cash rate are a winding back of what the bank described as extraordinary support which was provided to stimulate the economy and returning interest rates to normal levels while addressing soaring inflation rates. Rate rise decisions by the RBA result in interest rate rises across loan markets including business finance products. Though the timing and amount of any lender rate rises will be guided by... Read More
After an extended period of record low interest rates through 2020 and 2021, the Australian economy is now experiencing the first rate rises in around 12 years. A scenario which will be something very new to tackle for many businesses seeking financing. As the RBA undertakes a process of normalising monetary policy and raising the cash rate businesses need to prioritise seeking the cheapest financing rates to ensure cost-effective and workable business finance is achieved. To achieve this objective, business operators can address the key factors which contribute to being offered the best interest rates. In addition, a range of options in regard to lender, finance product and finance structure can be considered to ensure the overall financing is as affordable as possible. RBA Scenario The RBA held the cash rate at the historic 0.1% since November 2020 and consistently repeated its position as remaining patient and waiting for inflation and unemployment to be in target range to trigger a... Read More
As the new financial year gets underway, it’s opportune for businesses to review their finance options in light of current taxation measures. While a cheap interest rate is integral to cost-effective business finance, tax deductions can represent a real saving. Deductions reduce taxable income which lowers the amount of tax payable in that financial period. All forms of business finance have tax deductible elements. But the amount of the deduction and the timing in when that benefit may be realised, varies with different finance products. Deductions are subject to rulings as made by the ATO. In addition to the standard tax rulings, the Federal Government can introduce special measures, often with a timeframe, to support and assist business. Such was the situation in April 2020 when the Federal Government introduced Instant Asset Write-off as a tax measure for eligible businesses and assets as part of the COVID-19 stimulus package. This measure was amended several times later in 2020 to temporary... Read More
New Financial Year Commercial Finance Considerations
. 5 min read
The start of the new financial year is a far more significant ‘new year’ for the business community than the start of the calendar year. 1 July means a lot more to business operators than 1 January, when many could possibly be relaxing on holidays. 1 July is a time to get seriously involved in many aspects of the business. 2021 has additional significance, due to ongoing risks and threats to operations presented by the coronavirus pandemic. While Australia has done extremely well in economic terms re the pandemic, ongoing outbreaks and snaps lockdowns are constant reminders of the lurking risks. Astute business owners will be taking time out mid-year to assess their finance requirements moving forward. Growing a business can involve investing and that involves sourcing cost-effective commercial finance. But not all business investments involve the purchase of equipment, plant or physical assets. There are non-tangible purchases to be made in order to affect business expansion. We explain the... Read More
The end of one financial year and the start of the next can be an exceptionally busy time for most business owners and operators. You could be engaged in your own EOFY sales to generate additional income and move stock. Most will be focussed on tax issues to ensure all boxes are ticked and affairs in order before 30 June. Some will be seeking a discount at the EOFY sale events for motor vehicles and equipment. And this time of year often coincides with school holidays which can place additional demands on-time schedules. But amidst all that you have to do, it is also an appropriate time to take time to reflect on how you could set up your business for improved performance in the new financial year. Consider what tweaks you can make here and there to realise savings and generate additional income. One area worth taking a close look at is in regard to existing business loans and... Read More
Simple Steps to Estimating Your Business Finance Repayments
. 6 min read
To take on business finance to acquire vehicles, trucks and equipment, plant and machinery is a major consideration. Many business operators may need to prepare financial projections and cash flow forecasts to plan the acquisitions in their operational expenditure. Key personnel may need to prepare budgets and proposals detailing ROI and expected productivity and performance outcomes from the acquisition for senior management and board approval. Most business owners, especially SMEs and sole traders need to work out if they can afford the purchase. Differing purposes and objectives but with one common thread – buyers primarily need and want to know what their finance repayments maybe when acquiring major assets. They need to be able to quickly and easily convert the purchase price of the equipment or vehicle into monthly repayments for inclusion in planning documents or to rule goods in or out of their affordability range. Read more here. That process is made easy and without any high-level maths or... Read More
EOFY: Tax Time, Sale Time, Decision Time For Business Loans
. 6 min read
The end of the financial year, 30 June, signals the annual scramble for both consumers and businesses to make the most of both sale events and get their tax affairs in order. While for consumers it is customary to be able to secure goods from their wish lists at reduced prices, for businesses there are wider and more significant issues to consider. Decisions made by businesses at this time can set them up well for the year ahead and allow them to take advantage of tax measures on offer. After a highly disruptive EOFY 2020 and the economy now recovering from the impacts of the coronavirus ahead of expectation, EOFY 2021 maybe even more significant than in previous years. Sourcing low interest rate business finance can be pivotal to realising EOFY business objectives and we cover off a number of key issues for businesses to consider around commercial loans and business asset finance at this crucial time of year. Business... Read More
RBA June 2021: Interest Rate Updates For Your Business Loan
. 5 min read
The Board of the Reserve Bank of Australia (RBA) hold a scheduled meeting on the first Tuesday of each month except January with a decision on the interest rate the key topic of the meeting. The RBA is tasked with setting the official cash rate and Australia’s monetary policy. The cash rate is not the interest rate that applies to business finance products. It is a rate that banks and lenders pay in interest rate for overnight borrowings. Essentially the rate determines at what level lenders set their both their borrowing and their savings interest rates. Following the RBA Board meetings, the RBA Governor, Philip Lowe, issues a statement which details the rationale for the board’s decision. This statement provides insight both into the current decision and the central bank’s forecasts for the economy and interest rates moving forward. On Tuesday 1 June, the RBA held its meeting, the first following the Federal Budget delivery and a day prior to... Read More
