Research from GetCapital reveals that the last six months has seen consistent growth in cash deposits in SME accounts, helped by a range of factors including JobKeeper payments, mortgage and loan deferrals, superannuation withdrawals, and other stimulus payments, and has helped to grow the SME account balances by double.
It also found that even businesses seeking temporary loan repayment deferrals have been actively working to build larger cash reserves, albeit at a lower level.
“These findings suggest that talk of a looming fiscal cliff is likely to be overblown,” said GetCapital chief executive Jamie Osborn.
“While revenues are still down, SMEs have been taking advantage of extra cash flow from a raft of government measures that seek to boost working capital, putting businesses in a stronger position to weather future uncertainty.
“That makes it much less likely that the gradual winding down of support will impact the financial health of SMEs.”
However, Mr Osborn added that not every business is equally well prepared.
“One of the unusual features of this recession is the way COVID-19 has affected different industries in very different ways,” he said.
“That’s also clear in the savings data, which shows businesses in more severely impacted sectors are finding it much more difficult to save extra working capital.”
The research also showed that businesses in Victoria have been somewhat more successful in increasing their savings than those in the rest of the country, with average balances increasing by around 150 per cent between January and September, compared with other states.
It noted that government support has been a primary driver in helping businesses build resilience, rather than any easing of restrictions to date.