In part one of this analysis, industry experts discuss the budget's impact on SMEs
The measures outlined in the Federal Budget last week revealed some unprecedented opportunities for SMEs against a once in a lifetime pandemic and global recession. In part one of our two-part Federal Budget analysis, MPA spoke with the founder of National Finance Brokers Day and Marketplace Finance national manager – partner acquisition Dino Pacella, Specialist Finance Group aggregation manager Blake Buchanan and Australia’s highest ranking Top 100 broker and My Home Loan managing partner Darren Liu, about the business opportunities for brokers.
Instant asset write-off opportunities
An uncapped instant asset write-off for businesses generating less than $5b in revenue has surely been one of the most game-changing elements of the 2020 Federal Budget.
According to Pacella, this and other measures aimed at businesses could not only benefit SME clients, it could also result in a boon for brokers.
“Look at the investment that can be unlocked due to 99% of businesses being able to write off the full value of eligible assets that they buy.”
He says this ability to purchase new equipment means a greater potential for increased work and revenue.
“The private business sector is breathing heavily and the instant asset write offs will see an opportunity to bring a level of calmness back to the sector.”
Buchanan agrees that this measure could translate to better business for brokers.
“The beefed-up asset write-off is excellent news for those that need the cash flow boost.”
“Also, the extra money in tax payers’ pockets, along with welcomed changes to the NCCP, means that there will be more borrowers utilising the services of a broker.”
“This means that brokers will be able to inject cash flow into their business sooner whilst potentially assisting more consumers with their finance needs, resulting in greater turnover.”
According to Liu, the budget measures aimed at SMEs will work to boost the economy as a whole.
“SMEs count as a cornerstone towards our economy. They make up 99% of the economy and employ two in every three Australian workers.”
“By giving this boost to SMEs, it is creating opportunity for everyone.”
Will tax cuts and government stimulus drive more borrowing?
Countless businesses across the country have been forced to seek out finance solutions to get them through periods of lockdown and decreased consumer spending. Liu says finance will continue to be key as we move into the next phase of the COVID-19 crisis.
“One thing we've learnt is that more business owners are aware of cash flow importance, and when we're in recovery and growth, we'll need to be equipped with business loan knowledge.”
Despite claims the budget has set the foundations for a borrower-led recovery, Liu maintains that when it comes to residential lending, household confidence is really the deciding factor. He says in recent times, more of his customers have shown greater caution when it comes to borrowing despite the recent stimulus.
“Even if there is opportunity and policy support, people tend to make conscious decisions, they always ask more professionals for advice, and not many of us have gone through the tough COVID-19 situation either.”
“More people are waiting and seeing, so let's not rush.”
Be sure to catch tomorrow’s follow-up on how the budget will impact residential lending for further insights into the residential space.