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Around a third of businesses believe they have enough cash on hand to sustain operations for less than three months, as fewer businesses continue to report a decrease in revenue.
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1 in 5 businesses seeking credit as revenues stabilise: ABS
23 October 2020
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The Australian Bureau of Statistics’ latest business snapshot found that 31 per cent of businesses continue to see a fall in their monthly revenue, although that has fallen from a high of three out of four businesses back in May.
Despite the sustained reduction in revenue, just one in five businesses sought additional funding over the past six months.
Close to 50 per cent said they chose not to seek out loans because they did not want to increase debt, while the vast majority reported that they had sufficient funds to cover their costs.
For those that sought credit, almost three-quarters said they did so to cover operating costs, with businesses in accommodation and food services the most likely to have sought additional funds.
The latest ABS survey also found that about a third of businesses estimated that they could survive for less than three months on available cash on hand that includes savings, assets that can easily be sold and unused credit facilities.
Earlier this week, the Australian Banking Association announced that lending to small and medium businesses had remained strong throughout COVID-19, with $41 billion in loans approved since February, averaging more than 500 new loans each day.
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CreditorWatch chief economist Harley Dale said that while it was promising to see cash flow stabilising, the findings around new lending indicated a need for businesses to be weaned off government support.
“The fact that such a large majority of firms aren’t seeking new funds is indicative of the one-size-fits-all approach that the government stimulus measures have taken,” Mr Dale said.
“The likelihood is that taxpayer money is being put into companies that will fold without it and these firms are taking on business that could otherwise be absorbed by healthier companies.”
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