When considering taking on new commercial loans for assets and non-assets, businesses may benefit from preparing and planning prior to the end of the financial year. With cost-of-living pressures affecting many consumers along with the uncertainty stemming from the global tariff situation and the lead-up to the Federal Election, the 2024/25 business environment has been quite challenging for many operators.
With the election finalised, businesses can now make their plans based on Labor’s policies. With the markets expecting several rate cuts from the Reserve Bank this year, businesses may have more confidence to plan major asset acquisitions with finance. With the experiences of 2024/25 business owners may consider what financing they should consider, to support their cash flow moving forward.
With the end of the financial year not far away, now could be the ideal time to review your current financials, plan your requirements, prepare budgets, have the necessary conversations with your accountant and our brokers, to ensure any new finance is well-planned to achieve the optimum outcomes.
Commercial Loans Interest Rates Outlook
The outlook for interest rates generally is positive, with most experts and markets expecting several rate cuts from the RBA in 2025. The March quarter inflation figures released by the Australian Bureau of Statistics (ABS) at the end of April, showed a rise of 0.9%. But this still places the annual rate at 2.4%. This rate is well within the RBA’s 2-3% target range. But as has been consistently stated by the RBA Board, they will be looking for inflation to be sustained in the target range.
Cash rate cuts by the RBA, when announced, flow through the lending markets. Banks and lenders then set their own rates based on the new cash rate and their own borrowing and operational costs, and their own economic outlook. Some lenders will be more positive and competitive than others and potentially reduce their loan rates by the full extent of any rate cuts. Others may not.
With our extensive lender selection, we have the resources to find our customers the most competitive rates in the market to suit their profile.
Commercial Loans for Asset Acquisitions
The same credit facilities apply for financing assets for each financial year with no change due to government policies or RBA decisions. Lease, Chattel Mortgage, Rent-to-Own and Commercial Hire Purchase can be used to finance new and used assets such as plant, machinery, equipment motor vehicles and trucks.
A key aspect in deciding which credit product is best suited to a business and will deliver the best outcome is the accounting method. Chattel Mortgage works with the cash method, Rent-to-Own and Lease with the accruals method, and CHP with both methods.
At this time of year, business owners may have the conversation with their accountant around whether or not the credit facility they have been using is still working for their business. If not, there may be a need to change the accounting method being implemented. A change to the accounting method used by a business can only happen at the start of a new financial year. So now is the time to have that conversation if necessary.
Commercial Loans for Non-Asset Expenditures
Many businesses will be planning expenditures to grow, expand or upgrade their business which do not fall into the category of assets. These may include a range of purposes, including, for example, IT upgrades for more advanced AI capability and to strengthen their physical and cyber security systems.
Finance for non-asset purposes is available with Unsecured Business Loans and with our Lender Overdrafts. Many businesses operate overdrafts and a regular review of the facility may be advisable to ensure it still suits the purpose. If the rate is higher than we can secure, or if the purpose may be better suited with a Business Loan, have the conversation with our brokers for advice on the options available to you.
Commercial Loans for New Businesses
A new financial year is a popular time for many employers to switch the way they earn by setting up their own business. Many will require financing, possibly for machinery to establish themselves as an owner-operator, and for other equipment, tools and resources needed in their field.
Our access to Low Doc Finance across our portfolio may make the loans required both more easily attainable and more affordable. Speak with us about your new business plans.
Tax Deductions on Commercial Loans 2025/26
With no mention of instant asset write-off or other specific business tax benefits in the Federal Budget or during the election campaign, it would be assumed that the same tax deductions will apply on commercial loans through 2025/26. Unless otherwise enacted by the government.
Interest and lender fees on business loans is generally deductible. Lease and Rent-to-Own payments are deductible. Chattel Mortgage and CHP deliver a deduction through asset depreciation. The rate of the depreciation will be as per the ATO schedules for the year the asset was acquired.
Businesses keen to start planning their financial requirements for 2025/26 can use our Finance Calculators to assist with that planning and preparing budgets.
To discuss your commercial loans requirements for the new financial year, contact Business.Finance on 1300 000 033.
DISCLAIMER: THE SPECIFIC PURPOSE IN PROVIDING THIS ARTICLE IS FOR GENERAL INFORMATION ONLY. IT IS NOT INTENDED AS THE SOLE SOURCE OF FINANCIAL INFORMATION ON WHICH TO MAKE BUSINESS FINANCE DECISIONS. BUSINESS OWNERS WHO REQUIRE ADVICE OR GUIDANCE AROUND THEIR SPECIFIC FINANCIAL CIRCUMSTANCES ARE RECOMMENDED TO CONSULT WITH AN ADVISOR OR ACCOUNTANT. NO LIABILITY IS ACCEPTED IN REGARD TO ANY MISREPRESENTATIONS OR ANY ERRORS RE ANY DATA, SPECIFICS, POLICIES AND OTHER INFORMATION AS SOURCED FROM OTHERS.
