Business borrowing plans strengthen

Businesses signal intent to seek credit to grow during the third quarter of 2014

Business borrowing plans strengthen


A majority of businesses are optimistic about growth heading into the third quarter of 2014, while the number of firms planning to borrow to expand operations has hit a three-year high.

The findings from Dun & Bradstreet’s business expectations survey for the third quarter shows 64 per cent of businesses are more positive about their growth prospects compared to 2013.

The survey results show 21 per cent of businesses intend to seek credit to grow – the strongest response since the beginning of 2011.

Dun & Bradstreet says borrowing plans have steadily improved since falling sharply in 2012.

"Credit is a driving force in the economy and a critical tool for business investment and expansion, making this recent upward trend in borrowing plans particularly encouraging," Dun & Bradstreet head of group development Adam Siddique says.

While the number of businesses that will not seek credit to grow in the third quarter sits at 74 per cent, Dun & Bradstreet expects record low interest rates will encourage greater commercial credit activity.

Capital investment and hiring expectations have also lifted.

While expectations for sales, profits and selling prices are lower, Dun & Bradstreet economic adviser Stephen Koukoulas says they remain well above the levels of 2013.

"Activity in the business sector remains mixed, however, the positive news on borrowing and capital investment intentions points to a degree of optimism, particularly in the non-mining sectors," he says.

The survey found that 35 per cent of businesses expect higher earnings in the third quarter compared to 15 per cent that forecast a fall, and 50 per cent that anticipate no change.

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