01 Sep HOW HAS COVID19 IMPACTED ON BORROWERS

The banks, finance companies and private lenders borrow money from investors in order to fund the loans they approve for clients to purchase cars,trucks and machinery etc. During times like the present with the economic uncertainty, we see a tightening of lending policies to satisfy their investor’s appetite for risk.

The current trend across the board is for lenders to follow each other with the changes they are making to their lending policies. They are certainly asking for more information than previously-things like the following are required :

•       Last three months bank statements for the business
•       Copy of the current tax portal
•       Copies of the most recent BAS statements

As we move forward the big four banks in Australia need to adhere to the lending standards imposed by APRA ( especially post Royal Commission ) and other other statutory bodies, along with satisfying the requirements of their investors during these uncertain times.

Banks and finance companies are still lending to established businesses although they need to tick a few more boxes. The traditional lenders are certainly looking at cash flow trends of all applicants and their decision making is on the side of caution rather than an entrepreneurial ‘yes’.

Lenders are closely monitoring the industries applicants operate in when considering the merits of an application for finance.

The industries below appear to be the worst affected by the tightening lending policies:

•     Gyms & Fitness industry
•     Airlines and travel
•     Manufacturing
•     Hospitality

The following industries seem to be more appealing to lenders currently:

•     Mining
•     Transport
•     Utilities

Whilst we are experiencing tighter lending policies from funders it is not all doom and gloom. With lenders requiring additional information , applications presented with all the information are being approved by the mainstream lenders.

It also appears some non-bank lenders who have always been more flexible have seen an opportunity to obtain a bigger share of the market. They are regularly in contact with their delivery channel (the broker network) with pricing and policy changes in order to attract new applications.

The view of the COVID19 impact from where we sit at Aussie Commercial Loans appears to be that there are a number of industries and individuals that have been severely impacted and are not yet to the recovery stage. For every industry that has experienced a downtown in turnover there is one that has seen an increased turnover as people’s lifestyle and needs changed due to the government imposed restrictions.

We suggest that if you are considering a purchase of vehicles,equipment or machinery give us a call or send an email to discuss.