Donuts or more specifically, double donuts, have moved into general conversation and represent positive news on many fronts. If you're watching your waist line, then they're not so good news. At the higher echelons of tennis, to have a double donut, or bagel as they tend to refer to them, against your name in a game can be crushing. But when a state is reporting the daily COVID-19 statistics, a double donut day, stats news become ecstatic news. That’s no new locally acquired cases of coronavirus and no deaths from coronavirus in that reporting period. It’s a record that countries around the world aspire to and Australia has achieved.
From a business and economic perspective, we going to give it the moniker of The Donut Index because it also signals an easing of restrictions which have been holding back many businesses and the reopening of economies. All great signs for business to bring forward and action their equipment investment plans.
At Jade Equipment Finance, we have customers across many industry sectors as we provide loans to construction and mining, medical and health, civil and civic works, manufacturing and engineering, general business, retail, hospitality, agriculture and farming, transport and many more. So we can’t be too specific in what the Donut Index may mean to you, but in general terms, it appears a positive indicator especially when considered in conjunction with other figures.
General Business Overview
Looking back, it’s hard to comprehend what 2020 threw at us all with the coronavirus pandemic and the reality is, for many businesses, when the clock ticks to 2021, it doesn’t mean it’s all over. The impacts will be felt for some time as Australia continues to be impacted by what is happening on a global basis. With the situation critical in the USA, UK and Europe, it is not looking like international travel will be back to pre-COVID levels for some time to come.
But the tourism sector is seeing a positive impact from the domestic travel now that borders are being lifted and locals discover what’s on offer in their own backyard.
On the domestic front, in October the consumer confidence bounced back to higher levels than pre-COVID which surprised many economic analysts. This is the figure that research groups calculate as the ‘mood’ of consumers towards the future. It can be used by businesses as an indicator of whether the time is right or not to invest and grow their business.
Another big news item was the announcement by the Prime Minister Scott Morrison and Trade Minister Simon Birmingham of the RECP – a Regional Comprehensive Economic Partnership Agreement. This is trade deal with Australia and 14 other countries in the Indo-Pacific region. Touted as a potential major boost for exporters and particularly for the farming sector, this may be especially significant for your business. RECP could be the catalyst for you to invest in new equipment for your agriculture or export operation.
Development of a COVID-19 vaccine is also impacting various areas of the economy. The US stock market, which flows through to the Australian scene, has been reacting in various ways as different pharmaceutical companies update their progress to the market. All part of keeping an eye on the Donut Index because a vaccine appears to be key to moving forward at full pace.
As we reported previously, the RBA cut the official cash rate at the start of November and the new historic low rate is expected to be in place for some time. Jade has established our business based on an assurance of better interest rates and any shift downwards in the official rate should flow through our lending panel and allow us to offer even lower rate equipment finance.
Consider the interest rate cut in conjunction with Instant Asset Write-Off and temporary full expensing measures announced in the Federal Budget and the scenario for equipment acquisition becomes even more favourable.
Equipment Finance Update
Jade Equipment Finance continues to provide cheap interest rate equipment finance for the purchase of many types of equipment. Our lenders include banks and many non-bank lenders that specialise in equipment finance and can offer extremely favourable loan deals because they have a better understanding of your industry.
While we offer the full portfolio of business finance products, for those wanting to realise the taxation benefits of full expensing or IAWO, Chattel Mortgage is the most suitable type of loan. It is often named as an Equipment Loan by some banks, so don’t get confused, it is the same product.
Chattel Mortgage is a relatively straightforward way to finance a wide range of equipment. The borrower purchases the equipment and has full use from day one while the lender takes a mortgage by using the equipment as security against the loan. This type of finance suits businesses that implement the cash accounting method. With this method, the asset is entered on the balance sheet and the tax benefit realised with depreciation of the asset over time and under the ATO rulings.
Under full expensing and IAWO, eligible businesses can appreciate full depreciation of eligible assets in the year of purchase, subject to criteria and time frames.
So if the Donut Index is the sign you’ve been waiting for to make those equipment investment moves, give us a call to discuss your options.
To discuss the equipment finance options contact Jade Equipment Finance on 1300 000 003
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