According to the research, small businesses are now paying AU$9bn less in interest on current loans every year compared to the same time in 2011. Further, the average rates paid on small business loans is now at the lowest level since RBA data first commenced in 1993.
“Less interest paid by small business on their loans will help drive economic growth, create new jobs and tackle unemployment,” said Australian Bankers’ Association chief economist Tony Pearson.
Pearson also pointed out that the average interest rate paid on all current loans held by small businesses has fallen in the past six years from 8.4% in 2011 to 5.3% now.
“Based on a loan of AU$100,000 that equates to an interest saving of around AU$3,000 per year,” he said. “When you look at the bigger picture the story is even more positive.”
According to Pearson, as of September, there were a total of AU$282bn in outstanding loans to small businesses in Australia, and based on the lower rates, they’re now paying almost AU$9bn less a year in interest compared with the same time in 2011.
For larger businesses, the average interest rate has fallen from 7.1% to 3.4% over the past six years. As of September, there were a total of AU$747bn in outstanding loans to large businesses with the amount of interest being saved annually, when compared with six years ago, recorded at a staggering AU$27.6bn.
“That’s a lot of extra money that can be invested into growing a business and creating jobs,” Pearson said.
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The latest data from the Reserve Bank of Australia has revealed the vast savings currently enjoyed by businesses across Australia as interest rates remain at a record-breaking low.