SME loan enquiries are up 14%: borrowing to grow, or borrowing to survive?

For business owners and the brokers who advise them, the key question is whether new borrowing solves a temporary problem or delays dealing with a structural one. This article sets out what the data shows and how to think about it.

What the data shows

Business loan enquiries from SMEs rose 14% year on year in September 2026, according to Equifax's latest Business Market Pulse.

Large businesses moved the other way, with enquiries down 11.4% on September 2025. Across all business sizes, enquiries rose 10.1%.

Equifax's general manager of commercial, Brad Walters, said smaller operators are using credit to cover day-to-day costs.

Source: Equifax Business Market Pulse, as reported by Mortgage Professional Australia.

Payments are starting to slip

Cash-flow strain is also showing up in how businesses pay their bills. In August, 90.2% of invoices were paid on time, unchanged from July, but the share of invoices between one and 30 days overdue rose from 6% to 7.9%.

Walters said businesses appeared to be stretching supplier payment terms by a week or two to preserve cash, and flagged early arrears as a measure to watch heading into the final quarter.

Builders and transport operators feel the pressure

In construction, SME business loan enquiries rose 13.6%, while equipment finance applications fell slightly, by 1.6%. Facing material costs and payment delays, smaller builders appear to be securing cash lines to keep current projects moving.

Large transport and logistics businesses bucked the broader trend for large firms, with loan enquiries up 33.2% even as asset finance applications fell 16.6%. Walters linked this to fuel, wage and supply chain pressures.

Growth isn't the main driver yet

Asset finance applications are still below last year's levels, though the gap has narrowed: they were down 3.2% year on year in September, compared with a 12.7% fall in August.

Investment intentions remain weak. Only 26.9% of businesses surveyed by Roy Morgan said the next 12 months would be a good time to invest in growing their business, while 49% said it would be a bad time.

This sits alongside weak confidence more broadly. NAB's September survey showed business confidence fell to -13, in the weakest 5% of readings on record. See Business confidence is in the bottom 5% on record.

Borrowing to grow vs borrowing to survive

Not all working capital borrowing is a warning sign. The difference lies in what the money is for and how it will be repaid.

Borrowing that bridges a temporary gap might cover:

• a large receivable or progress payment that's due but delayed
• a seasonal dip in trade before a known busy period
• a one-off tax obligation, with a clear plan to repay
• stock or materials for confirmed work.

Borrowing that masks a structural problem might involve:

• repeatedly refinancing to cover ongoing losses
• using new debt to pay old debt without any improvement in trading
• relying on property equity because the business itself can't service the loan
• rising tax debts with no plan to repay them.

Lenders and brokers should ask the same question a careful business owner would: will this funding leave the business in a better position, or simply postpone a harder decision?

When property-secured funding fits

Many SME owners hold property, whether commercial premises, investment property or other real estate, that can support business-purpose funding. Used well, it can provide:

• working capital for a defined purpose, with a clear repayment plan
• refinancing of expensive short-term debt into a more manageable structure
• funding to bridge a delayed receivable or project payment
• consolidation of tax debt with a structured repayment plan.

The key is a credible exit: a confirmed receivable, an asset sale, a refinance once trading improves, or business cash flow that can realistically service the facility. Property-secured lending puts the property at risk, so it suits businesses with a genuine, temporary need, not those funding ongoing losses. See First mortgage vs second mortgage and ATO tax debt.

What lenders look at

For property-secured business loans, lenders typically assess:

• current trading performance, not just last year's financial statements
• aged receivables and payables, including whether the business is stretching its suppliers
• tax liabilities and any payment arrangements with the ATO
• the timing and certainty of expected cash coming in
• for builders, the profitability of each project, not only overall results.

For brokers

• Clarify the purpose and exit before submitting a working capital scenario.
• Prepare current management accounts, aged debtors and creditors, and ATO statements up front.
• Be candid about the pattern of past borrowing. Lenders respond better to a clear explanation than to surprises.

The Funding Door view

Rising SME credit demand reflects the pressure many businesses are under. Well-structured, property-secured funding can help a sound business through a temporary squeeze. The best outcomes come when the funding has a clear purpose and a realistic repayment plan.