Small business accessing finance to keep stock levels high: NAB

In its latest survey, the bank found that Australian businesses are using working capital to ensure they have enough Christmas stock on their shelves.

The survey found that Australian businesses are continuing to invest and grow, with NAB’s trade and working capital lending up 51 per cent and 58 per cent spike in the use of the funds ahead of the busy holiday shopping period.

“We’re seeing businesses change the way they hold stock, with many choosing to hold more product to reduce shortages — if you can’t service customers immediately, you risk losing them to competitors,” NAB executive for business metro, Michael Saadie, said.

“Last year, Australians spent more than an estimated $8 billion across the four days from Black Friday to Cyber Monday, this shows Aussies have really embraced the trend adopted from our American friends and is now a permanent fixture in the sales calendar. 

“This year, we’re navigating through a different economic environment, but the trend highlights the importance of having product available when and where customers want it.”

The smaller states led the charge when it came to NAB’s lending through trade and working capital with South Australia posting an annual increase of over 300 per cent, followed by Queensland that saw an increase of 70 per cent.

The Australian Banking Association also found that lending to SMEs had increased 16 per cent from $281 billion in August 2019 to $326 billion in August 2022.

The ABA 2022 SME Lending Report released on 24 November found that the number of microbusinesses (self-employed people employing no staff) rose 10 per cent to 1.55 million in the year to June 2022, while in the same period the number of small businesses (one to 19 staff) grew 3 per cent to 955,861. The ABA’s data showed the appetite for finance had returned to the longer-term average among small businesses but was growing among medium businesses. In August, the total value of outstanding finance to small businesses was just over $142 billion, returning to the medium-term average after having dropped to under $138 billion in the second quarter of 2022.

In the six months to August 2022, 17 per cent of SMEs reported anticipating requiring additional finance in the following three months.

The ABA found of those SMEs that intended to take out additional finance, the main reason was for cash flow or working capital, but fewer businesses were reporting a requirement to borrow for cash flow purposes, which suggests that cash flow problems were less of a concern than they were a year ago.