Challenging conditions for almost everybody except farmers who spend up big

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Asset finance lending on new farm machinery was at a 10-year high in financial year 2021 and an all-time record for CBA

Farmers sitting on their best season in years have taken on record debt to operate the latest farm machinery

While many Australian businesses were significantly impacted by the COVID-19 Pandemic during the financial year ending June 2021, positive conditions in some sectors saw new business lending in asset finance grow at 20% year on year.

And according to data from the Commonwealth Bank (CBA) the volume of new asset finance lending they provided was the biggest ever recorded for the bank across a financial year.

According to the CBA data, a record number of Aussie businesses invested in motor vehicles, and plant and equipment assets in the last financial year – with new asset finance lending volumes 20% higher than the median volumes recorded over the past ten financial years.

CBA’s Group Executive Business Banking, Mike Vacy Lyle, said many businesses had capitalised on several months of increased customer demand in 2020 and Government tax incentives to prepare for future growth.

“While the operating environment has been challenging for many businesses for the last 18 months, we’ve seen some businesses in sectors like agriculture and manufacturing, restock and invest in equipment upgrades, expansion of fleets, new fit outs or take advantage of technological advancements.”

“Each business has its own unique demands and opportunities that asset financing can support – from sole traders looking to secure loans for a new vehicle, to listed entities looking to acquire a business via an asset backed structured facility.”

In FY21, there was a significant increase in new asset finance lending across a wide range of asset classes including transportation, construction, agriculture, aircraft and shipping, IT, motor vehicles and earthmoving equipment. Growth in some areas topped 150 per cent.

Largest new lending growth in FY21 by asset group*:

  • Aircraft and Shipping +150 per cent
  • Earthmoving Equipment +120 per cent
  • Agriculture +50 per cent
  • Motor Vehicles/Light commercials +40 per cent
  • Trucks and Trailers +35 per cent

Largest new lending growth in FY21 by asset group for corporate and specialised Agri businesses:

  • Earthmoving, mining and construction assets +270 per cent
  • Specialised Agricultural lending +240 per cent
  • Manufacturing +120 per cent

Where farming plant investments grew

Asset Class% Growth FY
Tractors41%
Harvesters50%
Headers120%
Sprayers21%
Seeders72%

“We’ve seen many larger corporate and specialised agricultural customers take on asset backed facilities to upgrade plant and manufacturing sites or new greenfield projects,” said Mr Vacy Lyle.

“Pleasingly, despite the current lockdown restrictions in many of the states, we’re already seeing strong demand for asset finance in FY22.

“In saying that, we know this isn’t the case for all businesses, and ongoing uncertainty surrounding COVID-19 and lockdown restrictions are having an impact on some of our customers. We have a range of support measures available for those who need some help over the next few months.”

CBA asset financing rates start at 2.84%* p.a. for a three-year term for eligible customers under the SME Recovery Loan Scheme and runs until end of December 2021. For more information visit, www.commbank.com.au/assetfinance or call 1800 ASSETS.*Disclaimer: Rates are subject to change. For current interest rates see, Business banking rates and fees