The most common types of debts owed by people in business who entered a new personal insolvency.
Banks and businesses are the most common types of debts
In September quarter 2020, the most common types of debts owed by people in business who entered a new personal insolvency were to:
- banks ($279 million, 35% of the value of debts)
- businesses, sole traders and individuals ($256 million, 32% of the value of debts).
Although the value of debts to both types of creditor has fallen, the difference between them has narrowed throughout 2020.
Although we don’t ask people for the nature of their debts, we can infer that many of these debts are trade creditors. Common types of businesses that we identified were:
- commercial leases and real estate
- equipment rental and leasing
- lawyers and
- internet, communications and marketing.
Other types of debts
The other main types of creditors of people in business who entered a new personal insolvency in September quarter 2020 were:
- tax ($132 million)
- finance (nearly $108 million).
We include a wide range of lenders in our finance category. This includes buy now, pay later businesses and lenders who provide guarantor loans at relatively high interest rates. Although the value of debts owed to these companies has fallen compared to last year, the proportion of debts owed to these types of lenders has increased.
In September quarter 2020, people in business who entered a new personal insolvency owed:
- buy now, pay later lenders: 1.50% of all finance debts (a rise from 0.96% in September quarter 2019)
- lenders who provide loans that require a guarantor at relatively high interest rates: 0.14% of all finance debts (a rise from 0.10% in September quarter 2019).
Total debts owed in business related personal insolvencies
In the September quarter 2020, people in business who entered a new personal insolvency owed $790 million. The amount owed has fallen each quarter since the September quarter 2019. The number of people in business who entered into a new personal insolvency also fell over this period. Consistent with previous quarters, construction was the most common industry they worked in for September quarter 2020.
Read more about the number of people who enter a new personal insolvency:
For more information about these statistics download the explanatory guide.