With Australians heading to the polls on 3 May 2025, business owners are once again grappling with an age-old question: how will the election impact business confidence?
Business confidence often dips in the months leading up to an election day, driven by policy uncertainty and cautious decision-making, making some business leaders hesitant to apply for finance. But Dan Verdon, Director of Working Capital Solutions NSW at Octet, says there’s no reason for businesses to delay funding decisions.
“There is absolutely always a bit of hesitancy in the market around election time, but it’s really the borrowers, not the lenders, who hold back.”
And the data backs him up. While election periods often spark business uncertainty, the numbers tell a different story about their real impact on the economy.
Data shows pre-election lending slowdowns are more perception than reality
The pre-election slowdown in business activity often comes down to feelings, not facts. As Dan puts it, “I don’t think anyone’s ever really been able to put their finger on exactly why there’s that perception that ‘we should do nothing.’ Yes, there’s an election brewing, but we all get up the next morning and go to work.”
Businesses, especially SMEs, often adopt a wait-and-see approach during election periods, delaying key investment and funding decisions. Ahead of the 2019 election, Westpac found 50% of small businesses were worried or uncertain about the impact election policies will have on their operations, delaying decisions such as staffing and investment as a result.
But post-election, there was a quick recovery in SME confidence. Westpac’s post-election survey found that 55% of SMEs were optimistic after the election – up from just 19% beforehand. Ganesh Chandrasekkar, Westpac’s General Manager for SME Banking, described a “palpable shift in sentiment,” with delayed projects fast-tracked.
Dan explains, “Each time an election comes around, there’s always talk about hesitancy and delays. But for most SMEs, elections don’t usually have an enormous impact.”
The data supports this. A recent analysis by investment bank Barrenjoey concluded that Australian federal elections have limited impact on the economy, RBA policy, or confidence. Over the past 35 years and 12 elections, Australia’s domestic equity market has delivered an average annual return of 9%, with only two down years coinciding with elections.
Why the election shouldn’t put business financing plans on hold
For lenders, it’s business as usual. “I’ve never seen the handbrake go up from the lenders themselves,” Dan explains. “It’s more about market sentiment. People are unsure what’s going to happen, so that creates a delay in their decision to proceed.”
In Dan’s experience, the actual funding needs of SMEs don’t disappear during an election cycle. “If you need funds now, chances are you’ll still need a cash flow or working capital solution facilitated by a lender after the election as well,” notes Dan.
While certain industry sectors may be impacted by specific policy changes, such as new import regulations or environmental mandates, the vast majority of SMEs are insulated from major shifts.
“We don’t have a crystal ball, and we don’t know what legislation might change,” Dan says. “But history shows us that most SMEs won’t experience any significant impact.”
Don’t let uncertainty stall your business’s growth
For businesses considering finance in the lead-up to the election in May, Dan offers this advice: don’t wait.
“You’ll still need working capital, you’ll still need to fund growth, and you’ll still face the same opportunities and challenges,” says Dan. “Waiting until after the election to secure business finance may mean missing out on opportunities now.”
Disclaimer: These comments are only our views and should not be construed as advice. You should act using your own information and judgment. Although information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy, and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgment as at the date of publication and are subject to change without notice.
