Rateseeker Round-up: February Business News

Rateseeker Round-up: February Business News

As we settle into the business year, February brings a mix of encouraging progress and important caution signals for Australian businesses.

Inflation continues to ease, now well within the Reserve Bank’s target range, which could pave the way for more stable interest rates and improved cost conditions. Business sentiment remains steady in many sectors, even as others continue to navigate ongoing challenges. Meanwhile, the number of active businesses continues to grow, reflecting a resilient entrepreneurial spirit despite economic headwinds.

On the lending front, Australians are borrowing more, particularly for vehicles and personal purchases, and many businesses are exploring finance options to support growth. If you’re seeking funding, we’ve included practical steps to help boost your creditworthiness.

We’re also highlighting critical ATO updates, including warnings around tax avoidance schemes and renewed efforts to stamp out phoenix activity, issues that could impact businesses of all sizes.

It’s a dynamic time, and staying informed is essential. Here’s what’s happening across the business landscape this month.

Inflation Slows Again, But Where To From Here?

Inflation is still heading in the right direction, and that could mean relief is on the horizon for interest rates, wage pressures, and the overall cost of living.

According to the latest figures from the Australian Bureau of Statistics, annual inflation dropped to 2.4% in the December 2024 quarter, down from 2.8% in the previous quarter. That marks the seventh fall in the past eight quarters, continuing the steady decline from its peak of 7.8% back in December 2022.

This is encouraging news, especially for businesses and households that have been closely monitoring rates and rising costs. It brings inflation well within the Reserve Bank of Australia’s target range of 2–3%, at least for now.

That said, it’s not all locked in just yet.

The RBA has warned that inflation may not stay in check. In its December meeting, the board flagged ongoing risks from “excess demand in the economy” and “persistently high services price inflation.” In other words, prices in areas like health, education, and other services are still climbing faster than the RBA would like.

On the flip side, there’s also a chance inflation could dip below the RBA’s target range. If economic growth slows further and unemployment rises, we might see downward pressure on both wages and consumer spending, which could further lower inflation.

In short, inflation is cooling, but we’re not out of the woods just yet. The next few months will be key in shaping how the RBA responds, and whether another interest rate cut could be on the cards.

Business Confidence Holds Firm, Despite a Tough Economy

Although trading conditions remain challenging for many Australian businesses, signs are emerging that optimism is starting to build, particularly for the year ahead.

According to analysis by CreditorWatch chief economist Ivan Colhoun, overall business conditions haven’t changed much in recent months. While they continue to sit well below the peak levels seen during the pandemic-era stimulus period, the situation has largely stabilised.

Short-term expectations have dipped slightly, suggesting that many businesses are still bracing for near-term headwinds. However, confidence in the longer-term outlook is showing resilience. Expectations for business conditions over the next 12 months improved during the final quarter of 2024, indicating that many businesses are starting to look ahead with cautious optimism.

Not all sectors are feeling the same, though. Industries like retail, mining, and manufacturing are among the least confident heading into early 2025. On the other hand, recreation and personal services, finance, transportation, and property and business services are leading the charge in terms of positive sentiment.

Meanwhile, the latest data from the Australian Bureau of Statistics revealed 2,662,998 actively trading businesses across the country as of June 2024, 2.8% higher than the previous year. This growth was driven by a strong entry rate of 16.8%, which outpaced the 14.0% exit rate, suggesting that while some businesses are closing, many more are entering the market and betting on better days ahead.

So while the current economic climate is far from easy, there’s a growing sense that conditions may start to improve later in the year, especially for sectors well-positioned to take advantage of renewed consumer confidence and business activity.

ATO Warns: Watch Out for Dodgy Tax Schemes and Phoenix Activity

The Australian Taxation Office (ATO) is sounding the alarm on a wave of questionable tax schemes being pushed online, many of which are targeting unsuspecting individuals and business owners with offers that seem too good to pass up.

The ATO has warned businesses of all sizes to be especially cautious about schemes that promise to drastically reduce or eliminate their tax obligations, usually in exchange for a hefty upfront fee. Often, these promoters disappear once they’ve been paid, leaving participants exposed to serious consequences, including financial penalties.

Two particular schemes have recently caught the ATO’s attention. One involves setting up a supposed not-for-profit foundation and restructuring finances in a way that disguises personal income as belonging to the foundation. The other pitches an “investment opportunity” in a startup company with questionable legitimacy.

In both cases, the schemes are misleading and risky. They’re often dressed up as clever loopholes or creative strategies, but, in reality, can leave participants in hot water with tax authorities. The ATO stressed that even well-meaning individuals and businesses can fall for these traps if they don’t do their due diligence first.

At the same time, the ATO is continuing its crackdown on illegal phoenixing, where a business is deliberately wound up or abandoned to avoid paying taxes or debts, only to re-emerge under a different name. The government is backing these efforts with additional funding, recognising the widespread damage this behaviour causes to employees, suppliers, and the broader economy. In fact, illegal phoenix activity is estimated to cost the Australian economy approximately $4.9 billion annually.

The message is clear: if a tax deal looks too good to be true, it probably is. Always seek trusted financial advice and steer clear of anything that seems overly complex or suspiciously generous. When in doubt, it’s safer to check in with a licensed accountant or your tax agent before making any big moves.

How to Boost Your Business Loan Approval Chances

Securing a business loan isn’t always easy, especially in a market where lenders are more cautious. But the good news is that there are several practical steps you can take to improve your creditworthiness and put your best foot forward with lenders.

• Get your finances in shape: Lenders want to see stability. The more consistent your cash flow and revenue, the stronger your application will look. If your numbers have been up and down lately, consider applying during a period when your business is performing well.

• Provide security if you can: While unsecured business loans are available, offering collateral, such as property, equipment, or even a personal guarantee, can open the door to more lenders and better loan terms.

• Keep your records clean and current: Make sure your tax returns, profit-and-loss statements, and balance sheet are all up to date. Solid financial documentation makes it easier to demonstrate your business’s health and repayment capacity.

• Check your credit profile: Both your personal and business credit scores matter. Review them before applying so you can correct any errors and work on improving any weak spots. Things like timely repayments and reducing outstanding debt can go a long way.

• Lean on an expert: This is where a broker comes in. At Rateseeker, we can help structure your loan application, identify the right lenders for your situation, giving you a significantly stronger chance of approval.

As we wrap up this month’s insights, one thing’s clear: Australia’s business and property landscape is evolving fast. From shifting inflation trends and regulatory updates to fresh opportunities in lending and investment, staying informed is key to staying ahead.

Whether you’re looking to grow your property portfolio, secure funding for your business, or simply make smarter financial moves, having the right support can make all the difference.

Ready to turn “maybe” into “approved”? Chat with our team at Rateseeker today, and we can help you make your loan application too good to refuse.