The latest SME Business Barometer report by non-bank lender Banjo Loans reveals ongoing pain and uncertainty being felt by Australia’s small-to-medium enterprise businesses (SMEs).
The report found that loan applications and deal volumes flatlined, which reflects an overall picture of caution and hesitation. Western Australian SME businesses suffered the most, taking a step backward and a downquarter in funding.
Banjo Loans CEO Guy Callaghan highlighted the ongoing uncertainty SMEs continue facing, pointing to weak loan application numbers and a shift away from earlier hopes for recovery.
“SMEs are feeling the weight of the ongoing economic challenges, with most businesses still wary of borrowing or investing,” said Callaghan. “While some regions like Victoria are seeing a slight uptick, the overall mood across the country remains one of caution. The lack of a typical end-of-year rush further indicates the ongoing strain businesses are under.”
In terms of loan quality, the report found that SMEs are still managing to meet their loan payment obligations, following approvals. However, it also highlighted that SMEs with revenue under $2 million remain the most cautious, with many hesitant to take on any additional debt in the current market.
“Serviceability and meeting eligibility criteria continue to be the highest reasons for loan rejections, particularly with the rise in businesses carrying unsustainable ATO debt,” added Callaghan. “The ATO’s aggressive approach to recoup outstanding payments is likely contributing to this trend.”
In terms of arrears, most industries have been able to manage their arrears, apart from transport and warehousing, where the subdued economy seems to be taking its toll.
“Despite the difficult market conditions, this report shows that there are areas of opportunity for SMEs,” Callaghan said. “To continue to support growth, a more proactive approach to financial support, potentially through targeted policy adjustments, will be key in encouraging more businesses to borrow and invest.”
While Australia’s SME sector remains caught in a prolonged downturn, the data noted a need for targeted policy measures to help businesses regain stability and drive growth in the face of ongoing economic uncertainty.
