Challenging conditions but FY21 Asset Finance lending at a 10-year high

While many Australian businesses were significantly impacted by COVID during FY21, positive conditions in some sectors saw new business lending in asset finance grow at 20 per cent year on year according to data from the Commonwealth Bank. This volume of new asset finance lending is the biggest ever recorded by CBA in 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 per cent 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 business 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

“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.”

For more information on the CBA business support measures visit www.commbank.com.au/coronavirus

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 current at 23 August 2021, and are subject to change. For current interest rates visit, Business banking rates and fees.