BUSINESS FINANCE


BUSINESS FINANCE SOUGHT

All businesses were asked whether they had sought any debt and/or equity finance during the year ended 30 June 2011. If finance had been sought, the business was also asked to identify the types of finance and status of finance sought (i.e. whether it had been obtained, not obtained or was still in progress). For the purposes of the survey, debt finance included any finance the business must repay, and equity finance includes finance provided in exchange for a share in the ownership of the business. Businesses could report more than one type of finance and more than one status.

Business finance sought, by employment size, by type and status(a), 2010 - 11
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Businesses that sought debt or equity finance(b)		14.9	21.8	24.3	36.9	17.9
Type of finance sought by businesses(c)(d)
	Debt	92.8	92.9	95.9	89.5	93.1
	Equity	19.6	22.3	25.3	29.6	21.3
Debt finance that was:(e)
	obtained	85.4	87.7	84.5	92.8	86.3
	not obtained	8.3	5.3	8.2	1.5	7.1
	in progress(f)	7.4	7.6	10.1	7.2	7.8
Equity finance that was:(g)
	obtained	^53.3	^63.3	^46.4	^59.3	56.6
	not obtained	^46.1	^35.0	^49.1	^37.0	41.9
	in progress(f)	0.6	3.1	^11.1	4.1	2.9
^ 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 output category.
(c) Proportions are of all businesses that sought finance (either debt or equity) in each output 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 output category.
(f) As at the end of the reference period, 30 June 2011.
(g) Proportions are of all businesses that sought equity finance in each output category.

The proportion of businesses seeking finance increased with each successive employment size range, from 15% for businesses that employed 0-4 persons, to 37% of businesses that employed 200 or more persons.

By industry, businesses in Mining were most likely to report having sought debt or equity finance (38%) followed by businesses in Agriculture, forestry and fishing (33%). Businesses in Arts and recreation services, Health care and social assistance and Financial and insurance services were the least likely to have sought debt or equity finance (all 13%).


REASONS FOR SEEKING DEBT OR EQUITY FINANCE

Businesses that sought debt or equity finance during 2010-11 were asked the reasons for seeking finance, regardless of whether the finance was obtained. Businesses were able to provide multiple responses.

Reasons for seeking debt or equity finance, by employment size(a), 2010 - 11
			0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
			%	%	%	%	%
Businesses that sought debt or equity finance(b)			14.9	21.8	24.3	36.9	17.9
Reasons for seeking debt or equity finance(c)(d)
	Ensure survival of business		35.2	36.7	26.0	13.2	34.6
	Maintain short-term cash flow or liquidity		40.2	44.6	51.4	^41.2	43.1
	Replacement of:
		IT hardware	6.8	10.7	15.4	12.4	9.2
		other equipment or machinery	31.8	28.1	32.2	20.1	30.3
	Upgrade of:
		IT hardware or software	6.8	12.5	13.5	14.5	9.7
		other equipment or machinery	14.6	17.4	22.8	15.6	16.5
	Purchase of additional:
		IT hardware or software	6.7	8.2	10.0	13.4	7.7
		other equipment or machinery	16.5	20.5	28.7	19.8	19.3
		assets not related to expansion	5.5	4.2	5.9	^21.8	5.3
	Expand business		17.2	19.7	31.5	^45.0	19.9
	To introduce new or improved goods, services, processes or methods		6.1	10.0	11.7	8.1	8.2
	Other reasons businesses sought debt or equity finance		2.7	4.8	4.0	13.3	3.7
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Businesses which sought debt or equity finance were asked the reason(s) for seeking finance.
(b) Proportions are of all businesses in each output category.
(c) Proportions are of all businesses which sought finance (either debt or equity) in each output category.
(d) Businesses could identify more than one reason.

For businesses that sought debt or equity finance, the most common reason for seeking finance was to maintain short term cash flow or liquidity (43%). The least common reason for seeking finance was to purchase additional assets not related to expansion (5%).

The proportion of businesses that reported seeking finance to maintain short term cash flow or liquidity increased with each successive employment size range, with the exception of businesses with 200 or more persons employed. Businesses with 20-199 persons employed were the most likely to report seeking finance to maintain short term cash flow or liquidity (51%). Businesses that employed 5-19 persons were the most likely to report seeking debt or equity finance to ensure survival of the business (37%). Businesses with 200 or more persons employed were the most likely to report seeking finance to expand the business (45%).

By industry, businesses in Manufacturing and Financial and insurance services were the most likely to report seeking finance to maintain short term cash flow or liquidity (both 58%), while businesses in Transport, postal and warehousing were the least likely (23%). Businesses in Mining were the most likely to seek finance to expand the business (40%), while businesses in Retail trade were the least likely (12%).


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 2011. Government organisations include federal, state/territory and local governments.

Government financial assistance received, by employment size(a)(b), 2010 - 11
			0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
Estimated number of businesses(c)(d)		'000	464	238	58	4	764
Type of government financial assistance(e)
	Grants	%	3.0	7.1	13.6	23.4	5.2
	Ongoing funding	%	0.5	1.7	6.4	9.4	1.4
	Subsidies	%	1.5	4.8	8.7	19.9	3.2
	Tax concessions	%	0.9	2.3	8.2	18.5	2.0
	Rebates	%	4.8	9.0	14.6	21.6	6.9
	Other government financial assistance received	%	0.2	np	0.2	0.2	0.1
Any government financial assistance received		%	9.0	21.2	36.6	56.0	15.1
No government financial assistance received		%	91.0	78.8	63.4	44.0	84.9
np not available for publication but included in totals where applicable, unless otherwise indicated
(a) Proportions are of all businesses in each output category.
(b) Government includes federal, state/territory and local government.
(c) Estimated number of businesses is at 30 June 2011 and are provided for contextual information only, refer to Explanatory Notes 20 and 21.
(d) Refer to Explanatory Notes 8 to 11 for the scope, coverage and definition of businesses included in the BCS.
(e) Businesses could identify more than one type of financial assistance.

Overall, 15% of businesses reported that they received some form of Australian government assistance. Across the different types of financial assistance options, rebates were the most commonly reported type of assistance (7%).

The proportion of businesses that received some form of government financial assistance increased with each successive employment size category. It should be noted that while the proportion of businesses that received financial assistance is lowest for businesses with 0-4 persons employed (9%), this equates to approximately 42,000 businesses, whereas 56% of businesses with 200 or more persons employed represents approximately 2,000 businesses. Rebates were the most common form of government assistance reported for three of the four employment size ranges, the exception being businesses with 200 or more persons employed, which were most likely to report receiving grants (23%).

By industry, Agriculture, forestry and fishing had the highest proportion of businesses that received some form of government financial assistance (32%). Businesses in this industry were also the most likely to receive rebates (15%) and equal highest to receive subsidies (8%), along with businesses in Health care and social assistance. Businesses in Arts and recreation services were the most likely to report receiving grants (18%), while businesses in Health care and social assistance were the most likely to receive ongoing funding (9%) and subsidies (8%). Businesses in Mining were the most likely to report receiving tax concessions (7%).

Innovation-active businesses were more likely to receive financial assistance from the government (20%), than non innovation-active businesses (12%).