Three in ten Australian businesses say that capital constraints are hampering their ability to grow and function efficiently. Of those businesses which cited this issue, 52.4 per cent said they had fundamental problems accessing sufficient capital from banks, investors, other lenders and shareholders. It appears that banks are beginning to ready themselves on the restrictions of Basel III, and reducing the number of loans to businesses.
These are just some of the findings from the latest Alleasing Equipment Demand Index (the Index), which examines the current asset inventory and plans for future investment of Australian businesses. The survey also found that the lower corporate segment (annual turnover $20-100 million) struggle the most, with 30.0 percent citing it as an issue.
According to Alleasing’s Chief Executive Officer, Daniel Blizzard, businesses believe there are fundamental inefficiencies in the way capital is distributed in the Australian market.
“Providers of capital appear to have too much demand on limited funds, or they consider many businesses to be outside of acceptable risk parameters.
“More than half of the businesses suffering from capital constraints have told us they can’t access sufficient capital or credit to fund their expansion plans, which indicates there is still a lot of unmet demand. With the implementation of Basel III, banks will inevitably become more cautious on how many loans they grant. As a result, businesses will need to find alternative capital sources to continue to grow and remain profitable. ”
The Index also found that investment is the agenda for a greater number of businesses, compared to the prior round of research. Four in ten firms plan to increase their asset base in Q1 2017, but by a smaller percentage than previously indicated.