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Interest rates fall | Business profits rise | Twelve Grains Capital
Interest rates for business loans have been trending down for the past year, according to the Reserve Bank of Australia. The most recent data, which is for October, shows that over the past year average interest rates have fallen:
0.38 percentage points for small businesses
0.27 percentage points for medium businesses
0.19 percentage points for large businesses
Smaller businesses tend to get charged higher interest rates than bigger businesses, because they’re deemed to be higher-risk. At the same time, lenders often charge new customers lower interest rates than existing customers, because competition for new customers is intense. The latest data shows new borrowers are getting average discounts of:
0.91 percentage points for small businesses
0.21 percentage points for medium businesses
0.20 percentage points for large businesses
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Businesses have enjoyed solid growth in their gross operating profits over the past 18 months, despite covid. The latest data from the Australian Bureau of Statistics (ABS) shows the average company's gross operating profit enjoyed year-on-year increases of:
Jun 2020 quarter = 12.9%
Sep 2020 quarter = 18.5%
Dec 2020 quarter = 15.2%
Mar 2021 quarter = 11.7%
Jun 2021 quarter = 5.4%
Sep 2021 quarter = 5.4%
Part of the reason gross profits have been so strong during the pandemic is because of stimulus packages provided by both federal and state governments. Another is that wages have been constrained – wages grew just 2.2% over the year to September, according to the ABS, which is extremely low by historical standards. Recent Roy Morgan research found that 49.7% of businesses expect to be in better financial shape this time next year, compared to 17.4% who expect to be worse off. Want to expand? Call me for a loan
The federal government has made it easier for highly skilled migrants to remain in Australia and to continue working in critical sectors. These visa changes have improved access to permanent residence for:
Existing Temporary Skill Shortage (subclass 482) visa holders in the short-term stream
Legacy Temporary Work Skilled (subclass 457) visa holders who no longer meet the age requirement
Immigration minister Alex Hawke said there are about 20,000 visa holders in Australia who may benefit from these new arrangements. The government has also extended visas for skilled regional (provisional visa) holders (subclass 489, 491 and 494), a group that has been affected by covid-related travel restrictions. “Current and expired skilled regional provisional visas will be extended, providing additional time to meet regional work requirements for permanent residence,” Minister Hawke said. “There are currently around 9,000 skilled regional provisional visa holders overseas. These visa holders can enter Australia from 1 December 2021, and they will also be eligible for an extension of their visa." Click here to read the announcement.
Is your business struggling to find warehouse and factory space to buy or rent? If so, you’re not alone, because 2021 has been a record-breaking year for the Australian industrial and logistics sector, according to Colliers. Last month, Colliers announced that investment volumes had already reached $12 billion for this calendar year – well above the previous high of $7 billion recorded in 2016. Meanwhile, leasing demand reached 3.7 million sqm in the first three quarters of the year, beating the previous record of 3.3 million sqm that was set in 2020. The pandemic has led to a boom in online retail, which in turn has triggered a big increase in demand for big-box distribution centres and last-mile hubs close to the end consumer, according to Colliers. National vacancy rates for facilities larger than 5,000 sqm fell from 5.1% to 2.8% between the September quarters of 2020 and 2021. During the same period, net face rents jumped 4.3% for the prime market and 5.2% for the secondary market.
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