The value of small business loans skyrocketed in June as companies rushed in to make purchases on new equipment and property in the dying days of the last financial year.
Small businesses secured upwards of $3.6 billion in fixed-term loans throughout June, up 30% from already elevated levels in May, according to Australian Bureau of Statistics (ABS) data published yesterday.
As businesses across the country — with the notable exception of Victoria — contend with re-opening in the wake of the COVID-19 pandemic, an enhanced instant asset write-off appears to have lit a fire under spending on new assets.
The value of fixed-term loans for plant and equipment spiked 84% in June (against May) and was more than 150% higher than June last year, the figures reveal.
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The ABS data is derived from information provided voluntarily by lending institutions and the Australian Prudential Regulation Authority (APRA).
In March, Treasurer Josh Frydenberg expanded the instant asset write-off program, which enables SMEs to claim accelerated depreciation on new assets, increasing the value threshold from $30,000 to $150,000.
Later, in June, the government extended the timeline of the enhanced scheme to December 31.
The value of fixed-term loans for small businesses has been elevated over May and June as coronavirus restrictions have eased across most of Australia, but fell during April, as the first round of stay-at-home orders set in and many businesses were closing their doors.
The total value of secured loans was $2.2 billion in March, falling to $1.9 billion in April, before rising to $2.7 billion in May.
The value of plant and equipment loans followed a similar trajectory, while loans for new dwellings, purchases of new shops and industrial buildings also rose in June.