Australian business lending dropped in August

Peter Terlato 17 October 2016

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Loans have been falling for the last nine months.

The value of Australian commercial finance commitments fell slightly in August, while revolving credit commitments weaken.

The Australian Bureau of Statistics (ABS) released its latest lending finance data for August, reporting a 0.7% month-on-month decline in total commercial finance commitments.

This is the ninth consecutive month of reductions in commercial finance commitments. The last time there was a rise in total commitments was November 2015, as can be seen in the infographic below.

Revolving credit commitments also took a dive in August, sinking 3.6% month-on-month.

Revolving loan facilities allow businesses to borrow money as needed to fund working capital needs and maintain operations. Drawing against the loan brings down the available balance, whereas making payments on the debt brings up the available balance.

Fixed lending commitments in August were flat.

The value of housing finance for owner occupation fell (0.9%) in August, as did personal finance (-0.8%) and lease finance (-1.6%).

Total borrowings have fallen four out of the past five months and remain lower than a year ago.

This latest fall in lending finance is somewhat worrying, given the May and August rate cuts which brought the official cash rate to its lowest recorded level in Australian history.

However, in its latest Financial Stability Review, the Reserve Bank of Australia (RBA) notes that risks to financial stability from lending to households have lessened a little over the past six months.

Discover how to kick-start your business or take the next step using our comprehensive comparisons guide. Alternatively, if you've got bad credit, compare lenders which specialise in those types of loans.

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