KPMG Enterprise pre-Budget Client Pulse Check captures SME concerns

Blue skies, some clouds: more difficult to obtain loans but mid market remains optimistic, with NSW and Victoria most confident states.

  • 30 percent of mid-sized businesses confirm it’s been more difficult to obtain a loan since the Royal Commission into Banking.
  • 52 percent optimistic about their business’ future, but 63 percent pessimistic or neutral concerning personal finance.
  • Direct correlation between the downturn in the housing market and business confidence.
  • Instant asset write-off scheme impacts only a small minority of mid market businesses.
  • Over one third would invest in technology and new equipment if the tax rate were lowered.
  • 57 percent unlikely to expand offshore.
  • 86 percent feel measures to tackle the Black Economy are yet to have an impact on their business.

A pre-Budget Client Pulse Check conducted by KPMG Enterprise in March 2019 confirms what many small businesses have feared: since the Royal Commission, close to one third have found it more difficult to obtain a loan, with 14 percent saying it’s been ‘a lot more difficult’ and 17 percent ‘somewhat more difficult.’

KPMG Enterprise, which advises mid market organisations, undertakes a Pulse Check annually before the Federal Budget. This year 133 CEOs, CFOs and Company Directors completed the survey.

Just over half of respondents (52 percent) were optimistic about their business’ future in the next 5 years, but 48 percent were either pessimistic or neutral. Businesses situated in NSW (66 percent) and Victoria (49 percent) appeared the most positive.

Respondents were especially concerned about their personal finances, with over one third (63 percent) pessimistic or neutral. The downturn in the housing market has affected almost half (46 percent) with 11 percent saying they have been ‘greatly affected’.

This is also applicable to business outlook – those who were greatly or somewhat affected by the downturn in housing were also more likely to be pessimistic about the future of their business, relative to those with an optimistic outlook (61 percent versus 35 percent).

Political uncertainty, the forthcoming election and subsequent changes in policy have driven mid market concerns, with comments expressing anxieties over the slowing economy, escalating regulatory burden and global economic instability.

Although 57 percent of respondents indicated they were not considering expanding offshore, 20 percent were ‘definitely’ doing so and 21 percent mentioned it was a ‘possibility.’

In terms of Government initiatives, the Government’s $20,000 instant asset write-off scheme is yet to show an impact, with only 5 percent reporting a positive outcome.

Similarly, measures to tackle the Black Economy and reduce tax avoidance announced at last year’s Federal Budget were reported by 86 percent as having had no direct impact on their organisation.

Said Enterprise Partner and National Tax Lead, Brent Murphy: “There is a general feeling of cautious optimism, an indication of greater positivity than we saw in last year’s Pulse Check.

“Mid market companies are ready and willing to invest in their business. They recognise that only by harnessing new technology and innovation will it be possible to get ahead, combat disruption and tackle competitors in an ever-shifting economic climate. However, the Pulse Check shows a clear link between the housing downturn and diminishing business confidence which is a cause for concern.

“If the mid market is finding it more difficult to obtain bank loans, that will hamper future growth. That is as worrying as lack of overseas expansion, which forestalls entry into new markets.”

The KPMG Enterprise pre-Budget Client Pulse Check was conducted between 4-11 March 2019.

About KPMG Enterprise

KPMG Enterprise is a division of KPMG Australia whose prime objective is to help the mid-market fulfil its business objectives and ambitions. KPMG Enterprise works with established entrepreneurs, business owners, family businesses, not-for-profits, local government, startups and fast-growing, dynamic companies to build great organisations. It offers an extensive range of audit, tax, accounting and advisory services to help clients through every stage of their life cycle, whether starting, growing or exiting their businesses.

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