How have Australian business expenses been impacted by inflation?

A Small Business Loans Australia Study

November 2022

Small Business Loans Australia commissioned a study of an independent panel of 210 Australian small-to-medium enterprises (SMEs) to discover which business costs inflation has impacted, and whether SMEs will struggle meeting their expenses and may even need financing to get through tough times. Respondents were asked to highlight which business costs, from a list of 10, they predict they will struggle to meet in 2023. The listed costs were:

Labour
Supplier costs
Petrol
Equipment purchases
Rent
Insurance
Office and staff amenities
Utilities
Business consultants
Taxes

Respondents then asked to reveal whether they would consider getting a loan to meet these costs and, if so, how much (from under $10,000 to over $2 million).

Small Business Loans Australia surveyed 210 owners and senior decision-makers across the full SME spectrum: micro (1-10 employees), small (11-50 employees) and medium-sized (51-200 employees).

Three-quarters (72 per cent) of Aussie SMEs revealed they would struggle to meet some business costs now and will continue to do so in 2023. The costs that will most impact businesses are petrol and business suppliers (chosen by an equal 31 per cent of respondents). This was followed by 26 per cent of respondents who said they would struggle to meet labour costs, 21 per cent will struggle with rent, 19 per cent with equipment purchases, an equal 17 per cent with insurance premiums and tax, 10 per cent with office and staff amenities, 8 per cent with business consultants such as HR or accounting and 1 per cent 31% on other non-specified expenses.

72%

of Australian SMEs will struggle with business costs in 2022-23

Just over one quarter (28 per cent) said they won’t struggle with any costs.

By business size.

Across all 10 cost categories, micro businesses predicted they will be better off in meeting expenses than small and medium sized businesses.

Meanwhile, supplier costs are predicted to be the most difficult for small businesses to meet, with this expense topping the list for 46 per cent of small businesses. This was followed by petrol costs, chosen by 39 per cent of small businesses. Among medium-sized businesses, petrol is the most challenging cost to meet – chosen by 40 per cent of respondents in this business category. Medium-sized businesses are also struggling with the cost of equipment purchases and insurance premiums (chosen by an equal 32 per cent of businesses in this category).

Response
	State (%)
	NSW	VIC	QLD	SA	WA
Labour (salaries, wages, contractor bills)	26	23	20	27	38
Supplier costs	29	39	27	27	33
Petrol	36	36	18	33	38
Equipment purchases	15	13	31	20	19
Rent	26	16	16	27	14
Insurance premiums	29	18	16	13	14
Office and staff amenities	8	11	11	13	5
Utilities (power/water)	21	23	22	13	14
Business consultants (such as accountants and HR)	8	7	9	13	5
Taxes	20	16	20	13	14
Other	2	0	2	0	0
None - my business is not struggling to meet any costs	27	27	31	27	29

West Australian business owners are struggling to pay labour, supplier costs and petrol prices above any other state.

West Australian businesses owners are most likely to struggle paying labour costs, chosen by 38 per cent of SMEs, followed by 27 per cent of South Australian businesses, 26 per cent of NSW businesses, 23 per cent of Victorian businesses and 20 per cent of Queensland businesses.

West Australian businesses are also struggling to meet inflated supplier costs and petrol prices above any other state.

Inflated rents are a significant issue among South Australian and NSW SMEs with 27 per cent and 26 per cent, respectively, struggling to meet this cost. This is followed by an equal 16 per cent of Victorian and Queensland businesses and 14 per cent of West Australian businesses.

What percentage of Aussie SMEs would consider getting a loan to meet these costs – and if so, how much?

Small Business Loans Australia also sought to discover whether inflated costs of doing business would prompt SMEs to take out a loan in the next year to keep up with their expenses.

More than half (54 per cent) of Aussie SMEs revealed they would take out a loan. More than a quarter (28 per cent) would take out a business loan of $50,000 or more, and 25 per cent would take out a loan less than $50,000.

A bigger proportion of small businesses (75 per cent) are likely to get a loan to meet expenses in the next year, followed by 66 per cent of medium sized businesses and only 32 per cent of micro businesses.

More than a third (37 per cent) of small businesses would consider borrowing more than $50,000, while 8 per cent of micro businesses would borrow the same. In comparison, a similar proportion (39 per cent) of medium-sized businesses would borrow more than $100,000.

75%

of small businesses would take out a loan to meet inflated costs.

When comparing responses across States, Small Business Loans Australia found that a greater proportion of Victorian SMEs (61 per cent) would to take out a loan in the next year to meet rising business costs. This compares with 57 per cent of NSW businesses, 52 per cent of West Australian, 47 per cent of South Australian and 40 per cent of Queensland businesses.

Businesses in NSW and Victoria are most likely to take out larger loans, with an equal one third (33 per cent) willing to take out over $100,000 compared with an equal 20 per cent of Queensland and SA SMEs and 24 per cent of WA businesses.

Response
	State (%)
	NSW	VIC	QLD	SA	WA
Under $10,000	6	9	16	20	14
Up to $50,000	20	16	4	7	14
Up to $100,000	6	18	4	7	14
Up to $250,000	8	13	7	0	5
Up to $500,000	9	2	7	0	5
Up to $750,000	2	0	2	7	0
Up to $1m	8	0	0	0	0
Up to $2m	0	4	0	0	0
I would not get a loan	43	39	60	53	48