We thought we there and then we weren’t. But now it seems we are. The COVID-19 experience for Australian businesses has been a disruptive period and for many quite drawn out and unpredictable. But after a fantastic vaccination take-up in the past few months, we’ve finally achieved those key target percentages that trigger the next phases of reopening. While different states are currently at slightly varying stages, overall, the nation has reached a magic 70% double dose and hopefully, that means widespread lockdowns are no longer an option.
While reopening the economy and the country is a staged process, business owners that have been in pause, closed or slow mode for some time, will no doubt be eager to supercharge their own recovery process. Is your business ready and well-equipped for a resurgence? We update you on the latest thoughts and conversations around the economic outlook and most importantly interest rates and lending for those looking to invest in new equipment. Specifically the loan products and interest rates on equipment finance for reopening, recovery and resurgence post-pandemic.
Economic Outlook
Gauging the overall and general economic outlook is equally straightforward and complex. Experts, analysts and politicians have similar but varying opinions and it is astute to consider commentary in context with individual business and industry sector situations.
As Dr Philip Lowe, Governor of the RBA, noted in the October Monetary Statement, the impact of the Delta outbreak is uneven. Some businesses and sectors feeling the effects more severely than others that appear to continue to grow strongly.
As was expected, unemployment increased in the September figures but only by 1% to 4.6%. This reporting period does not cover the entirety of the NSW and Victorian lockdown periods. But of more importance is the increase in those no longer looking for work and in work hours lost.
Regardless of the latest figures, there is a sense of optimism that the economy will bounce back well. How quickly that will happen does come with uncertainty. There has not been as much support to business from the Federal Government during the 2021 Delta outbreak as there was in the initial pandemic in 2020 but the states appear to have stepped up with significant business recovery packages. Another doubt will be - did we open up too soon? This is a question that only time will reveal.
Lockdown has left consumers with strong balance sheets which should result in strong consumer spending over coming months. Good news for those operating in the B2C sector or supplying consumer goods.
Shortages in some labour markets pose a problem to many businesses but with international students and then skilled migrants being allowed entry in the not so distant future, that should fill many of those positions vacant.
Keeping an eye on the unemployment rate is significant to us as lenders as it has been earmarked by the RBA as one of the indicators, along with inflation, that they are watching in regard to increasing interest rates.
Interest Rate Update
While it’s been a terrible time on so many fronts, in regard to lending interest rates it has been historically very good. The RBA cut the official cash several times in 2020 as a monetary policy measure to support the economy during the pandemic and has kept the rate on hold at 0.1%, the lowest ever, since November 2020.
At their most recent meeting in October, the RBA Board repeated early statements that it was looking to inflation to be sustained at 2-3% (currently 1.75%) before raising rates. They still expect that timeframe to be around 2024. Good news for businesses looking to upgrade equipment to capture all the opportunities available to expedite their own recovery.
Equipment Lending Update
As specialist business finance lenders, equipment finance is one of our major markets and the low interest rate climate allows us to offer even more attractive, cheap rate and cost-effective solutions to our customers.
Our current rates across our finance portfolio – Chattel Mortgage, Commercial Hire Purchase, Leasing and Rent to Buy, continue our signature cheap rate story. The Interest Rate Comparison Calculator allows you to easily see and compare rates and estimated repayments on equipment you are considering across different loan types.
Chattel Mortgage continues to be a highly sought-after loan type as it is best-suited for those looking to utilise the temporary full expensing measure with their asset acquisitions. This accelerated asset depreciation measure is available for eligible assets by eligible businesses through this and the next financial year and presents significant tax write-offs.
Upgrade to Keep Up
Reopening and recovering from the effects of the pandemic will come with its own set of challenges for different businesses. A priority for many will be ensuring they are well-resourced and equipped to power forward as quickly and successfully as possible. Staying ahead rather than just keeping up.
Investing in new machinery, plant and equipment may be key to a resurgence. Acquiring cheap equipment finance is key to ensuring that resurgence is profitable. Our consultants work with all types of business – SMEs, family enterprises, sole traders, ABN-only operators and large companies across all industries to secure cost-effective and tailored equipment finance solutions.
Don’t be left behind in the recovery race. Speak with us about cheap equipment finance to facilitate your business resurgence.
For cost-effective equipment finance, speak with a Jade Equipment Finance consultant. Contact us for a quote on 1300 000 003
DISCLAIMER: IF MISINTERPRETATIONS, MISREPRESENTATION OR ERRORS EXIST IN THIS ARTICLE, NO LIABILITY IS ACCEPTED. THE INFORMATION IS PROVIDED ONLY FOR GENERAL PURPOSES AND NOT IN ANY MANNER INTENDED AS THE ONLY SOURCE FOR MAKING FINANCIAL DECISIONS. THOSE THAT CONSIDER THEY REQUIRE ADDITIONAL GUIDANCE OR ADVICE SHOULD REFER TO AN INDEPENDENT FINANCIAL ADVISOR.
