BUSINESS FINANCE


BUSINESS FINANCE

Business finance sought

All businesses were asked to indicate whether they had sought debt and/or equity finance during the year ended 30 June 2007. If finance had been sought, the business was asked to identify the types of finance; status of finance sought (i.e. whether it had been obtained, not obtained or still in progress); and the reasons for seeking finance. Businesses could report more than one type of finance sought, more than one status and multiple reasons for seeking finance.

Debt finance includes any finance the business must repay. Equity finance includes finance provided in exchange for a share in the ownership of the business.

Business finance sought(a), by employment size, by type and status - 2006-07
		Employment size
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Businesses that sought debt or equity finance(b)		16.7	21.8	34.2	40.0	19.6
Type of finance sought by business(c)(d)
	Debt	87.8	93.4	91.6	92.6	90.2
	Equity	31.2	21.2	20.1	35.0	26.5
Debt finance that was:(e)
	obtained	88.4	94.1	94.9	92.7	91.2
	not obtained	4.3	3.1	2.9	3.7	3.7
	in progress(f)	7.5	4.0	3.2	6.0	5.7
Equity finance that was:(g)
	obtained	^57.7	^65.1	^60.0	^51.2	^59.8
	not obtained	^41.4	^33.9	^39.5	^38.5	^39.2
	in progress(f)	1.5	2.5	1.7	^11.1	1.9
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Businesses were asked to identify if they had sought any debt or equity finance and, if so, the type of finance sought and whether it was obtained.
(b) Proportions are of all businesses in each employment size category.
(c) Proportions are of all businesses that sought finance (either debt or equity) in each employment size category.
(d) Businesses could identify more than one type of finance and more than one status.
(e) Proportions are of all businesses that sought debt finance in each employment size category.
(f) As at the end of the reference period, i.e. at 30 June 2007.
(g) Proportions are of all businesses that sought equity finance in each employment size category.

Overall, one in five businesses sought debt and/or equity finance during the year ended 30 June 2007, with the propensity to seek finance increasing with each successive employment size range. Businesses employing 200 or more persons were more than twice as likely to seek finance as those employing 0-4 persons.

Of the businesses that sought debt or equity finance, Debt finance was sought by 90% of businesses and Equity finance was sought by 26% of businesses. Of the businesses that sought Debt finance, 91% obtained it, compared with 60% of businesses that sought Equity finance obtaining it.

Of the businesses that sought debt or equity finance, businesses with 0-4 persons employed had the highest proportion that did not obtain debt or equity.

At the industry level, businesses in Mining were the most likely to report having sought debt or equity finance (32%), followed by Electricity, Gas, Water and Waste Services (29%).

Reasons for seeking debt or equity finance(a), by employment size - 2006-07
			Employment size
			0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
			%	%	%	%	%
Businesses that sought debt or equity finance(b)			16.7	21.8	34.2	40.0	19.6
Reasons for seeking debt or equity finance(c)(d)
	Ensure survival of business		29.0	23.8	14.8	7.4	25.2
	Maintain short-term cash flow or liquidity		40.9	43.0	38.3	49.2	41.3
	Replacement of:
		IT hardware	7.3	10.5	15.4	17.9	9.5
		other equipment or machinery	25.2	31.5	42.6	29.6	29.6
	Upgrade of:
		IT hardware or software	7.6	8.2	16.4	19.2	9.1
		other equipment or machinery	10.9	17.8	24.9	19.7	15.1
	Purchase of additional:
		IT hardware or software	8.5	15.1	14.6	22.4	11.6
		other equipment or machinery	16.9	32.6	32.4	25.8	24.1
	To expand business		15.0	24.0	34.6	54.9	20.9
	To introduce new or improved goods, services, processes or methods		12.8	14.5	14.2	16.4	13.6
	Other reasons businesses sought debt or equity finance		14.6	14.0	12.3	9.9	14.0
(a) Businesses were asked to identify if they had sought debt or equity finance and the reason(s) for seeking finance.
(b) Proportions are of all businesses in each employment size category.
(c) Proportions are of all businesses that sought finance (either debt or equity) in each employment size category.
(d) Businesses could identify more than one reason.

Of the 20% of businesses that sought debt or equity finance, the most commonly cited reason for seeking finance overall was to Maintain short-term cash flow or liquidity (41%). This was highest across the three smaller employment size ranges. For businesses employing 200 or more persons To expand business was the main reason debt or equity finance was sought (55%), more than three times the proportion for businesses in the 0-4 employment size range.

More than half of the businesses in the Electricity, Gas, Water and Waste Services industry, which sought debt or equity finance, did so for the Replacement of Other equipment or machinery. Businesses in Information Media and Telecommunications were more than twice as likely to report Replacing IT hardware than Upgrading IT hardware or software.


Government financial assistance

All businesses were asked whether they had received any government financial assistance (excluding tax deductions for normal business expenses) during the year ended 30 June 2007.

When interpreting proportions presented, readers should be mindful that when comparing data across employment size categories, a higher percentage value does not necessarily equate to a larger number of businesses. For example, in the table below, 50% of businesses that employed 200 or more persons, representing approximately 1,500 businesses, received at least one type of government financial assistance. This compares to 8% of businesses that employed 0-4 persons, which represents approximately 35,500 businesses.

Government financial assistance received(a)(b), by employment size - 2006-07
			Employment size
			0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
Estimated number of businesses(c)(d)		'000	444	206	55	3	708
Type of financial assistance(e)
	Grants	%	2.4	7.2	13.6	22.7	4.7
	Ongoing funding	%	0.7	2.2	5.3	7.9	1.5
	Subsidies	%	1.7	3.7	9.8	13.8	3.0
	Tax concessions	%	1.1	1.3	4.5	16.0	1.5
	Rebates	%	3.3	4.9	7.6	12.9	4.2
	Other government financial assistance received	%	0.9	2.8	3.6	6.2	1.7
	Any government financial assistance received	%	8.3	18.8	32.1	50.0	13.3
No government financial assistance received		%	91.8	81.2	67.9	50.0	86.7
(a) Proportions are of all businesses in each employment size category.
(b) Government includes federal, state, territory and local government.
(c) Estimated number of businesses is at 30 June 2007 and are provided for contextual information only, refer to Explanatory Notes 24 and 25.
(d) Refer to Explanatory Note 10 for the scope, coverage and definitions for businesses included in the BCS.
(e) Businesses could identify more than one type of financial assistance.

The proportion of businesses receiving government financial assistance overall increased across each successive employment size range as did each individual type of government financial assistance. Overall, and across most employment size ranges and industries, Grants were the most commonly reported type of government financial assistance received. A higher proportion of businesses employing 200 or more persons received government assistance in the form of Tax concessions than smaller businesses.

The proportion of businesses which reported receiving Rebates in the Transport, Postal and Warehousing industry was over four times the proportion receiving any other type of assistance. Similarly, businesses in Arts and Recreation Services were almost four times as likely to receive government financial assistance via Grants than any other type of assistance.