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National business loan inquiries increased 6.2 per cent year on year in July 2026, up from 3.8 per cent year on year in June 2026, according to the latest Equifax Business Market Pulse.
Across the majority of states in the country, business loans recorded growth in demand throughout the period, both for SMEs and larger businesses.
The services sector was a standout performer, recording a 21.7 per cent increase in business loan inquiries in the 12 months to July, including a 27.1 per cent increase among large businesses and an 18 per cent increase among SMEs.
NSW also recorded strong growth, with SME business loan demand increasing 15.3 per cent year on year in July 2026.
Banks ramp up business lending
Signs from the banks are also showing significant growth in business lending.
Australian Prudential Regulation Authority data showed business lending reached a six-year high of $1.26 trillion in June 2026, with $20 billion added during June.
The Australian Banking Association has also reported record levels of SME credit, with bank lending to small and medium-sized businesses reaching $750 billion in April 2026, compared with $567 billion in April 2023.
Major banks have seen their loan books swell over the 2026 financial year.
The Commonwealth Bank of Australia’s (CBA) business lending book increased by 13 per cent over the 12 months to June 2026, from $159 billion to $180 billion, Australia and New Zealand Banking Group (ANZ) reported a 4 per cent rise in business and private bank loans over the June quarter to $71 billion, while National Australia Bank saw business lending increase by 2 per cent over the same period.
Judo Bank, which caters specifically to SMEs, reported an 18 per cent increase in its lending book to $14.7 billion for FY26, up from $12.5 billion in June 2025 and $6.1 billion in June 2022.
Asset finance slides
While business loan demand increased, national asset finance demand fell 9.1 per cent year on year in July 2026, compared with a 2.4 per cent year on year decline in June 2026.
Across every state, asset finance demand declined among SMEs, and for large businesses, only South Australia recorded growth.
Overall, large business asset finance demand fell 4.8 per cent, marking its first decline since October 2025, while SME asset finance demand fell 12.6 per cent.
The services sector recorded a 12.6 per cent decline in asset finance demand, with SME demand falling 21.2 per cent.
Other industries contracting in growth included SMEs in housing and utilities, which recorded a 20.3 per cent year-on-year decline in asset finance demand in July 2026 and retail trade asset finance demand that fell 17.6 per cent year on year.
Consumer sectors under pressure
Equifax said quarterly labour and purchase costs continued to rise, while forward orders declined across the lifestyle sector.
Hospitality business loan demand increased 1.1 per cent and 2.6 per cent year on year among SMEs.
Hospitality asset finance demand, meanwhile, fell 9.3 per cent.
Retail and arts and recreation businesses reduced their credit exposure, according to Equifax.
Brad Walters, general manager of commercial at Equifax, said businesses across the sector were responding differently to the cost pressures.
“This cautious stance is particularly seen in consumer-exposed sectors such as the lifestyle sector, where muted confidence and rising overheads including elevated labour and purchase costs, continue to put pressure on margins,” he said.
“We’re seeing a split in how businesses are responding: retail and arts businesses are cutting overheads by limiting debt exposure, while cash flow-sensitive hospitality businesses are taking on business loans likely to help maintain liquidity.”
Payment discipline remains strong
Equifax’s latest debtor data, covering June 2026, showed 85.9 per cent of debts were paid on time.
Early payments increased to 11.6 per cent in June 2026, up 5 per cent from May 2026, meaning more than 97 per cent of total debt was cleared within standard terms.
Severe delinquencies of 91 days or more stood at 1.1 per cent in June 2026, up from 0.6 per cent in May 2026.
Walters said that overall default risk remained low, and commercial credit activity continued to be positive despite the decline in some areas.
“While we are seeing negative demand in pockets across the board, there is still growth for credit to support capital investments occurring among businesses across Australia,” he said.
“Unlike what we are seeing in the consumer credit landscape – which is experiencing deeply declining demand rates – in the current economic environment, we should view this commercial credit activity and overall business resilience as a genuine positive for Australian businesses given overall macro conditions.”
[Related: Banks battle for SME lending as margins hit 5-year low]
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