Upsurge of SMEs borrowing to invest in green vehicles and equipment

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New data from National Australia Bank (NAB) shows an acceleration of small and medium sized businesses investing in new or used energy efficient equipment, with the value of the bank’s loan book for Green Finance for Vehicles and Equipment (GFVE) in Western Australia growing 305% in a six month period.

Between October 2023 and March 2024, demand for the green finance from the bank in New South Wales grew 82%, Tasmania, 78% and Victoria 51% compared to the same period from 2022, with hot ticket items being electric vehicles up 51%, solar panels up 33% and electric buses up 168%.

NAB Business Banking Executive Brett Moore said the data highlights Australian businesses increasing efforts to improve their sustainability credentials, while also reducing business costs.

“With higher interest rates and stubborn inflation, many businesses are continuing to operate in a higher cost environment and are searching for cost savings,” Moore said.

“What we’re continuing to see is business owners making considered investments in energy efficient equipment that can help reduce operating costs – such as energy – as well as their carbon footprint.”

“And customers have so much more choice today when it comes to electric machinery. We have customers investing in assets such as electric buses, trucks, and forklifts and farmers investing in energy efficient tractors for their farming operations,” he said.

NAB’s green equipment asset categories include clean transportation, such as hydrogen powered vehicles and renewable energy sources such as solar panels, inverters and solar thermal equipment including pumps.

A manufacturing category covers equipment wholly dedicated to the manufacturing of the key components used in zero emissions transport and solar, wind and battery energy generation. Lighting includes LED lighting in commercial premises and waste management and recycling covers all aspects of these processes, including bins.

Moore said investment in green equipment would continue to be supported following the Federal Budget’s extension to the $20,000 (USD 13,285) instant asset write off for eligible assets.

“We welcome the extension and expect this will continue to drive investment in energy efficient equipment with the help of NAB’s business finance for green equipment,” he said.

NAB customer, VTH Supply Chain Solutions owner Daniel Zanon said his business currently uses four electric trucks and his goal is to add another 35 to their existing fleet of 140 petrol vehicles by the end of 2025.

“Covid brought with it a surge in online shopping and demand for home deliveries, and many of our clients are focused on their green credentials throughout the supply chain,” he said.

“My electric trucks can get their deliveries done with no vehicle emissions while also bringing costs down in the long run – such as gas expenses and fuel levies.”

NAB is actively financed 200 utility-scale projects with $16.8 billion in funds since 2003.

NAB Group Executive Corporate and Institutional Banking David Gall said the bank has seen significant growth in renewable energy financing in recent years adding further growth is expected over the next decade.

“In the 2023 financial year, NAB lent more than $2.2 billion to global renewable energy projects and has almost matched this figure in the first half of FY2024 alone, with another $1.9 billion in financing already committed to the sector,” he said.

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