Advantages of Getting an Aussie Loan
Due to recent CPI Increases
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16/01/2023
The risk of small business failures in Australia appears to be increasing as we commence the 2023 calendar year.
During 2022, the rate of inflation continued to increase, causing many small businesses to experience a negative impact on their profits.
Insolvency and CPI increases linked to business failures
Although we are still not seeing much of an increase in business insolvencies over the last year, there does appear to be an increase in enquiry levels in 2022, an article by Brendan Giles (Worrells senior manager).
In his article, Brendan Giles also suggests that business failures will continue to be driven by increasing inflation, which will lead to higher operating costs and wages for small businesses.
The article also indicates that there will be an increase in business failures (and insolvencies) because the ATO debt collection holiday is over, meaning that they are now in catch-up mode and becoming more active in addressing the backlog of tax det accrued over the last 2 years due to COVID-2.
According to the Council of Small Business Association:
“Higher-than-expected inflation of 7.3 per cent is crunching small business margins, killing profits and forcing a cautious approach to 2023” (source: the Accountants Daily media publication - 12th January 2023).
The advantages of fast loans for small businesses during inflationary times.
The advantages of taking out a small business loan when inflation (CPI) is increasing are:
- You can still get a small business loan even if your business has been through hard times and this has impacted on your credit report.
- In fact, your business credit score will improve by taking out a small business loan, assuming you pay back the loan on a timely basis.
- You will have immediate access to funds.
- You can choose the term of the loan that suits you best. In most cases, the quicker the loan term, the lower the interest rate, but if your business has serious cash flow issues a longer term may be preferable (to ensure that you can pay each monthly instalment on time etc.).
- Your business cash flow will increase to help you navigate through a difficult period, or to pay for unexpected expenses.
- Flexibility: Once your business loan is approved, your business doesn’t have to tell the bank how you are going to use the funds.
There are also some disadvantages of taking out a small business loan to relieve cash flow issues during inflationary periods, such as:
- The bank expects you to pay the loan repayments on time. If you are late with a payment, there may be penalties involved and your credit score may be negatively impacted.
- The bank may impose different penalties (that is, for missing payments etc.) and various other fees, terms and conditions, so it is important to discuss these with the lender.
It is usually beneficial to engage a mortgage manager or broker to assist with these types of loans, so that they can highlight all of the fine print for you. This way, you don’t get hit with any surprises down the track.
If you think a small business loan would be a good solution for you, but you are not sure how to get the ball rolling, one of the experienced brokers at Fair Go Aussie Loans will be happy to assist.
