Business Loans AU News

Tricky lenders fooling borrowers
AFTER the latest interest rate rise, potential borrowers are being warned about some of the tricks used by some lenders to win business. Some lenders regularly delayed their rate increases by a month or so, leading borrowers to think they were getting a better deal. However, because of the time it takes to finalise a loan, by the time the loan is ready to be settled, the lender's rate had moved up. Even though a lender intends to increase their rate, they are not required to advertise it in the headline or comparison rate until they actually change the rate. Borrowers usually find out too late and are locked in by heavy exit penalties. Unlike variable loans, fixed rates are not subject to decisions by the Reserve Bank, and rise and fall at the whim of the lender.
Thu, 12 November 2009
US banks hasten to adopt new loan rules
BANKS are moving quickly to restructure commercial mortgages under new US guidelines that are more forgiving of battered property values and can help banks avoid bigger losses.



Thu, 12 November 2009
Australian dollar hits 15-month high due to jobs data
AAP

The Australian dollar closed at a 15 month high on Thursday, after better-than-expected employment data firmed currency trader hopes of an interest rate rise in December.

At 1700 AEDT, the Australian dollar was trading at $US0.9340/45, up from Wednesday's close of $US0.9294/99.

It was the highest close for the local unit since it finished at $US0.9364/66 on August 1 last year.

During the overnight session, the unit traded in a tight range between $US0.9371 and $US0.9298.

TD securities senior strategist Annette Beacher said the Australian dollar broke out of its three day long, 50 US cent trading range after official jobs data showed a rise in total employment.

"It really shook the Aussie out of that trading range, because its really about increasing risk for a December hike," she said.

"I doubt there's a pause on (the Reserve Bank's) mind."

The Reserve Bank of Australia (RBA) has lifted the cash rate by 25 basis points each at its past two monthly board meetings, in November and October, and the rate now sits at 3.5 per cent.

If the RBA takes the cash rate higher in December, it will be the first time it will have done so over three consecutive months since the bank started announcing its interest rate decisions in January 1990.

During the domestic session, Australian Bureau of Statistics (ABS) data showed Australia's unemployment rate was a seasonally adjusted 5.8 per cent in October, compared with unrevised 5.7 per cent in September.

Total employment rose by a seasonally adjusted 24,500 to 10.832 million in October, beating market expectations for a decline of 10,000.

Full-time employment rose by 2,900 to 7.591 million in the month and part-time employment was up by 21,500 to 3.241 million.

The participation rate in October was 65.2 per cent, compared with 65.2 per cent in September.

Within minutes of the ABS releasing the jobs data, at 1130 AEDT, the debt futures market had fully priced in a 25 basis point rate rise for December.

"We've had two consecutive better than expected labour market reports, so I think the job sceptics can all go hide in a corner somewhere," Ms Beacher said.

With little economic data due during the offshore session and the rest of the week, Ms Beacher said the Australian dollar would continue to trade above $US0.9300 over the weekend session.

At 01600 AEDT, the Reserve Bank of Australia's trade weighted index (TWI) was at 71.6, up from Wednesday's close of 71.2.



Sat, 14 November 2009
$10bn worth of coastal homes at risk
RISING sea levels threaten to damage homes worth up to $10 billion along Victoria's coast, flood the St Kilda foreshore and put key industries at risk by 2100, landmark Government research warns.

Homes in the local government areas of Kingston, Hobsons Bay, Greater Geelong, Wellington and Port Phillip are considered the most at risk without stronger action to curb rising greenhouse gas emissions.

The report says that up to 45,000 Victorian homes - worth $10.3 billion - face inundation due to more extreme weather, particularly the combination of storm surges and rising sea levels.

A wide range of commercial buildings, roads and railway lines would also be affected.

The major report, to be released today, was prepared for the Federal Government and consists of new research from a number of prominent climate and coastal scientists.

Climate Change Minister Penny Wong said the report highlighted the need to act on climate change.

''This report is the first continental-scale mapping of residential buildings at risk from climate change, and the worrying implications for coastal homes and infrastructure are there for all to see,'' she said.

Across Australia 247,600 individual buildings valued at $63 billion could be damaged or lost, while major infrastructure, including Sydney and Brisbane airports, are at risk of being flooded by increasingly damaging storms.

The results are based on a 1.1-metre sea level rise by 2100, which scientists predict could occur if greenhouse gas emissions continue at the present rate, coupled with a one-in-100-year storm.

Evidence presented to a UN climate conference in March found that by 2100 sea level rises could be between 75 and 190 centimetres higher than in 1990.

In Victoria, the City of Kingston - which includes bayside suburbs Chelsea and Aspendale - is most at risk, with up to 9000 homes affected.

Special mention is made of the Melbourne suburb of Altona - home to Deputy Prime Minister Julia Gillard - and the wider City of Hobsons Bay, which could lose more than 7500 homes. Up to 6599 households in Greater Geelong could also be flooded or damaged.

In the City of Port Phillip, which includes St Kilda and Middle Park, 3600 homes are in harm's way.

Evidence suggests that by 2100, severe storm surges associated with climate change would flood parts of the St Kilda foreshore, including Luna Park and Acland Street. Erosion caused by higher sea levels could mean St Kilda and Middle Park beaches would be lost.

President of the Australian Coastal Society, Professor Bruce Thom, said building codes and other programs to adapt to climate change must now be nationally co-ordinated to address the increasing threats.

TOM ARUP

November 14, 2009

Tue, 17 November 2009
Small business conditions head in the right direction - AC
Small business trading conditions improved in the three months to September to stand at their highest in 18 months, a new survey shows.

The Australian Chamber of Commerce and Industry small business survey showed business conditions rose 6.7 points to an index of 49.1 in the September quarter, its highest level since the March quarter 2008.

But it shows that conditions are still at contractionary levels below 50, and remains below its long-term average of 50.9.

"However, we are encouraged that it is heading in the right direction," ACCI director of economics and industry policy Greg Evans told reporters in Canberra.

The index for expected economic performance also jumped to 55.6 from 41.6, its highest level since September 1999.

"We need to be able to convert those actual trading conditions into the better expected performance into the next quarter," Mr Evans said.

Sales, profitability and employment all improved during the September quarter, albeit at contractionary levels, while investment in plant and equipment lurched into positive territory.

Mr Evans said that had been encouraged by the government's investment allowance as part of its economic stimulus strategy.

"That has been one of the most successful aspects of the stimulus package," he said.

However, he warned there were "continuing storm clouds" on the horizon with access to credit remaining an issue for small business.

"We believe that's restraining businesses capacity to invest into the future," he said, particularly with earnings and sales revenue remaining low.

"So internal funding on behalf of small business, that don't have access to equity raisings like larger businesses, are finding it very difficult ... (and) could be a potential impediment in terms of future expansion."

AAP



Fri, 20 November 2009
Dollar forecast to peak at $US1.03
The already overvalued Australian dollar will reach parity with the US dollar in the next six to 12 months and peak at about $US1.02-03, a currency strategist says.

State Street Global Advisers head of currency management Collin Crownover says the unit is already overvalued by about 20 per cent and that the figure would stretch out to 30 per cent if it reached the $US1.03 mark.

"I think we'll see about a 10 per cent appreciation from where we are now," the London-based Dr Crownover said in Sydney on Friday.

"At that point, certain dynamics come into play and that becomes an extreme overvaluation.

"Even though Australia has a much better growth profile than the rest of the G10 right now, people at that level might take pause and say even though the growth is a lot better, that's pretty rich, relevant to the valuations used for investments into Australia."

Asked whether he felt the Australian dollar would remain at parity for long he said: "Perhaps not.

"We do think it will reach parity within the next six to 12 months.

"Then the Australian dollar becomes 30 per cent overvalued and historically that's been a point at which we see significant imbalances and it's much more likely to be corrected."

The strength of the local currency two years ago, when it traded as high as 98.5 US cents, was largely due to "speculative flows", while this time the flows into Australia were of a "more stable, long-term variety," he said. The currency was trading at around 91.64 US cents on Friday.

Dr Crownover said the US dollar would continue to be the main global reserve currency, despite talk of the emergence of the Chinese Renminbi.

He said the current weakness of the US dollar was part of a "cyclical decline".

"We think the US dollar's weakness is consistent with the relative economic growth in the US," he said.

"We don't see anything abnormal about the US dollar weakness currently at this phase of the business cycle."

He dismissed arguments that the world was seeing reserve diversification away from the US dollar, leading to the first stages of a US dollar decline.

"While I certainly think that could happen at some point, it hasn't happened yet," he said.

"There is no evidence that central bank reserves are being diversified away from US dollars."

US central bank reserves were now three times higher than they were at the start of the decade and US dollar reserves had remained roughly at two-thirds of global reserves since the introduction of the euro in 2002.

He conceded it would be ideal to have a more diversified basket of reserve currencies, but said there was no other currency which had the same level of credibility as the US dollar.

He argued the fixed Chinese Renminbi was not undervalued, adding that it would not become a reserve currency for about two decades.

Authorities in China would allow the Renminbi to appreciate by four to five per cent against the US dollar in the second half of 2010, he said.

"The reason we think that's not going to happen immediately is that China's economy is not as healthy as it might seem with the headline GDP (gross domestic product) numbers and the export sector is still very weak."

He said a failure to allow the Chinese currency to appreciate could lead to a "massive bubble", due to overinvestment.

© 2009 AAP



Thu, 26 November 2009
Business boosts spending plans
Businesses investment slipped unexpectedly last quarter but a sharp upward revision to spending plans supported policy makers' optimism about the economy and left intact the case for an imminent rise in interest rates.

The 3.9 per cent drop in private capital expenditure for the third quarter initially knocked the dollar lower as it seemed to lessen the chance of a rate increase at the Reserve Bank policy meeting next week.

Yet a big upward revision to spending plans for all of 2009/10 suggested the dip was the lagged effect of the global credit crisis and analysts were confident a revival lay ahead.

"The number we focus on is the forward looking component and spending plans were heavily upgraded for the fiscal year, which is very positive for the outlook," said Helen Kevans, an economist at JPMorgan.

"That will have positive implications for employment and spending and probably add to inflationary pressures," she added. "We forecast a 25 basis point move next Tuesday."

The central bank holds its December policy meeting on Tuesday. If it lifts the 3.5 per cent cash rate, it will be the first time it has tightened for three successive meetings.

One measure of market expectations from Credit Suisse put a 73 per cent probability on a rise to 3.75 per cent. December interbank futures imply a rate of 3.68 per cent and further rises to 4.5 per cent by June.

"For the RBA it actually gives them more confidence that growth will be back around trend by the end of next year," said Paul Brennan, head of economics at Citi.

"Given that things are improving in line with expectations, we'll see them raise interest rates next week."

Fuelled by LNG

Overall, capital spending by private firms amounted to $26.55 billion in inflation-adjusted terms in the third quarter.

Firms spent 2.9 per cent less on equipment, plant and machinery, which will drag a little on gross domestic product (GDP) in the third quarter.

Spending on buildings and structures dropped 4.8 percent but that was more than balanced by a big rise in public spending on schools, roads and the like, which was reported on Wednesday.

"Overall activity is looking to be fairly healthy in the second half of this year," said Andrew Hanlan, senior economist at Westpac. "A housing boom has already started and there's been a massive surge in public investment."

The latest estimate for private spending for all of the year to end June 2010 was $105 billion, up almost 6 per cent on the previous estimate and well above analysts' expectations.

The upgrade was driven in large part by Asian demand for Australia's resources such as coal, iron ore and, increasingly, liquefied natural gas (LNG).

The RBA has said its own liaison with firms suggested many had revived resource projects that were shelved earlier in the year when the global credit squeeze hurt confidence.

Government figures show that as of October there were 74 advanced minerals and energy projects under construction or committed to, worth a record $112.5 billion. There were also 267 projects undergoing feasibility studies or approval processes

One massive LNG project called Gorgon was alone worth $43 billion. The RBA has estimated that investment in LNG could rise from around 0.5 per cent of GDP now to 2.5 per cent in five years.

As a result, exports of LNG were set to expand three-fold or four-fold, putting them on a par with coal or iron ore, Australia's two biggest earners. "The increasingly positive outlook for business investment is consistent with the RBA's upbeat longer term view of the economy amid further expansion in the resources sector, strong population growth, and rising incomes," said Su-Lin Ong, a senior economist at RBC Capital Markets.

"Cash rates need to move higher and we continue to expect a hike at next week's board meeting."

Reuters



Wed, 16 December 2009
BUSINESS TIPS
THE KEY TO HAVING A SUCCESSFUL BUSINESS IS 'MINDING YOUR OWN BUSINESS'

Thu, 18 February 2010
Dont wait ,act now
Owning or starting a business is 'real hard work', the secret is to action your ideas sooner than later.

ed

Fri, 05 March 2010
Rate rise cheer for depositors
Read more wwww.theage.com.au

Tue, 06 April 2010
Australian dollar closes higher after rate hike
The Australian dollar closed almost one US cent higher after the Reserve Bank of Australia (RBA) raised the cash rate by a quarter of a percentage point to 4.25 per cent.

Read more www.businessspectator.com.au

Wed, 14 April 2010
Picking the right business structure
It is critical to get your tax structure right when you first start your new business, or you could end up paying more income tax than you need to.

Also, if you are a potential purchaser, do your homework to avoid paying too much for a business - overpaying will reduce your chance of success.

read more:www.theage.com.au/small-business/startup



Tue, 20 April 2010
Shares inch up amid investor caution
'Close The Australian sharemarket edged higher today, recouping some of Monday's losses as investors focused on solid earnings on Wall Street and fears ebbed over the fallout from fraud charges against top bank Goldman Sachs.'

Read more:http://www.theage.com.au/business/markets

Fri, 30 April 2010
Loans to business finally rise
Hopes for a pick-up in the small business sector increased after official figures showed loans to business increased for the first time in fifteen months in March.

Reserve Bank data showed business credit rose 0.1 per cent in March, seasonally adjusted, the first monthly gain since January 2009.

"Today's credit and lending aggregates showed a continued improvement in credit growth over the first quarter of the year," said JP Morgan economist Ben Jarman.

"The bell-ringer in today's report, however, was the return to growth in business credit."

Credit has been particularly difficult for small and medium-sized business since the financial crisis hit, slowing their rebound while the broader economy expanded. For the year to March, business credit was still down by 6.9 per cent, the RBA said. Banks consider loans to smaller businesses riskier than mortgage loans. Their aversion to lending to sector has been blamed for a spike in the failure of small businesses.

more @ www.theage.com.au/small-business/finance

Tue, 18 May 2010
Good and bad news for business
"The Henry tax review report produced good and bad news for the small business sector. The recommendation taken up Federal Treasurer Wayne Swan that causes the most concern is introduction of a mining super profits tax. It demonstrates a total lack of understanding of business and investment principles.

By announcing the mining super tax the Rudd government now clearly sees the mining industry as another potential source of tax revenue, as past Labor governments have viewed superannuation.

Just as the constant changes to superannuation have created mistrust in the Australian public, and weakened it as being the preferred choice of providing an income in retirement, the resources rent tax creates uncertainty in the mining sector and threatens the continued prosperity of it as an industry".

Read more: www.theage.com.au/small-business/finance/

Wed, 28 July 2010
Breaking down your business plan
There are two types of business plans for small businesses. The first can cost a lot of money and in the end produces very little in the way of results. The second is a lot simpler and is based around the cash flow of the business.

The first step in this planning process is to reduce the business to its smallest component parts. That does not mean taking last year’s results and increasing all of the income and expenses by a fixed percentage to reflect the effect of inflation. It does mean breaking down revenue into the different major income sources then breaking these down further to each product or service.

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