Businesses could soon feel a cold financial chill as Australian banks move into a recovery phase in 2022.



KR Peters director Peter Nicolls predicts the good times could be over as weary business owners and managers face a third year coping with the COVID-19 pandemic.



"Until now the banks have resisted adopting a hard line approach on businesses," Mr Nicolls said.



"To protect their image as the pandemic took hold they took a softer approach with customers, offering help to businesses affected by lockdowns.  For example they froze loans for up to six months, enabling businesses to save their cash flow, allowing them to continue trading during the lockdowns."



Federal and state governments also moved swiftly to protect small and medium enterprises with rent subsidies, financial packages and the multi-billion dollar JobKeeper wage subsidy which, according to the ABS, was rolled out to 3.5 million workers between April and June 2020 alone.



As vaccination levels rose and lockdowns were relaxed, government support tapered off and, in some cases, was withdrawn altogether as normal trading conditions were expected to return.



"With most states now having opened their borders and WA expected to open their border in March 2022, we are witnessing a strange phenomenon," said Mr Nicolls.



"There are no workers to fill positions and many businesses are struggling to trade.



"Materials are in short supply, in particular in the building sector, and we have been threatened with a shortage of adblue which has the ability to cripple the transportation of goods virtually in every industry."



Inflation is also creeping up for the first time in years.



"This is causing major concerns in the building industry where builders have locked in fixed price contracts and are being forced to absorb the price increases," Mr Nicolls explained.



At the same time governments are desperately trying to address the housing affordability crisis, with schemes like the Victorian Homebuyer Fund whereby the state government will contribute up to 25% of the purchase price to be recovered when the home is sold.



The First Homebuyers grant of $10,000 and stamp duty waivers for first home buyers spending up to $600,000 still remain in place, while record low interest rates continue to fuel a real estate boom putting further pressure on builders.



Mr Nicolls says the real test for the economy will be the behaviour of the banks over the next 12 months.



"Moving forward into 2022 the banks will only support clients that can produce healthy profit and loss statements," he predicted.



"I'm afraid more builders are going to start going broke because they can't build at the prices they have locked in at. The banks' position will be to force clients to commence repaying the interest component that was frozen during lockdown and to reduce clients’ loan facilities in line with their trading performance."



Mr Nicolls said this means people may need to sell property to reduce debt level to appease the banks.



"History tells us the banks show no mercy when they commence a recovery approach. It's a cold place to go when they put you in recovery; it's like being in a financial freezer."