SMEs remain cautious about debt

Small & medium sized enterprises are reluctant to take on debt, as the aftertaste of the financial crisis and access to credit continue to trouble businesses.

The latest Veda Advantage Business Credit Demand Index showed demand for credit fell 5.6 per cent in the April to June quarter compared to the same period in 2009.

While credit demand has grown slowly in volume across 2010, a pre-financial crisis appetite for debt is yet to return.

“Last year may have been artificially bolstered by Government stimulus activity and based on this we can expect a drop off in year-on-year demand.” Hamish Osborn, Head of Commercial Risk Products at Veda Advantage said.

South Australia and the ACT recorded the sharpest falls in the demand for credit, down by 10 per cent year-on-year.

By Virginia Harrison