Payday Super reforms could damage SME borrowing power

From 1 July 2026, employers will be required to pay employees’ 12 per cent superannuation guarantee (SG) at the same time as wages, instead of on a quarterly basis.

According to fintech platform Lend’s calculations, the reform could reduce borrowing capacity for small and medium-sized enterprises (SMEs) by between 7 and 15 per cent.

Bill Baker, chief executive officer of Lend, said the reform will materially change how lenders assess cash flow and serviceability for thousands of businesses, particularly those reliant on working capital facilities.

“Under the quarterly system, unpaid super effectively sat inside the business as a short-term liquidity buffer. That meant bank statements often showed higher average balances, stronger month-end positions, and more headroom in offset and redraw accounts. Lenders use all these inputs in their serviceability and risk models,” he said.

“Once super is paid alongside wages, whether weekly, fortnightly or monthly, that buffer disappears. Serviceability needs to be assessed on that new reality.

“We’re already seeing commercial brokers reassess SME cash flow under Payday Super assumptions to help their clients understand their post-reform borrowing position.”

Knock-on effects for borrowing power

Lend’s analysis indicates that a typical SME with an average monthly turnover of $86,000 directs approximately 60 per cent of revenue to wages. Under the current quarterly system, many SMEs effectively hold one to two months’ worth of unpaid superannuation within the business at any given time.

Once Payday Super is introduced, that buffer (roughly $10,000 in this scenario) will no longer exist. While this represents a 1 per cent reduction in cash flow, Lend said the flow-on effect on serviceability can be significantly larger.

“For businesses operating on profit margins of 5–10 per cent, a 1 per cent cash flow hit can absorb between 9 per cent and 18 per cent of surplus cash. Depending on the lender’s model, that can translate into a 7–15 per cent reduction in borrowing capacity,” Baker said.

Brokers are expecting increased demand from SMEs seeking funding to meet super obligations on time.

Speaking on a podcast to sister brand, The Adviser, Matt Erwin, broker and director at finance brokerage Cashman Consulting, said: “It’s not a bad thing that they’re moving the superannuation payments forward, but it will place an additional cost burden and stress on directors and business owners in funding that arrangement.

“Once that starts, that’s going to cause a big change in the cash flow of many businesses. So this is going to create more opportunities for finance, which directors are aware of, I think.”

What can brokers do?

Baker said the Payday Super reforms present a clear action list for commercial brokers ahead of July 2026.

Lend outlined five priorities for brokers to keep in mind as the changes approach.

1. Use lender-style serviceability tools and modelling: Brokers who rely on legacy software or calculators won’t see the impact of Payday Super until it appears in bank statements post-July. Adopting platforms that combine customer relationship management (CRM) functionality, credit decisioning, live bank data and accounting integrations, alongside predictive modelling, will allow brokers to assess serviceability before the reforms take effect.
2. Prepare a lender shortlist based on approval speed: With demand for working capital expected to rise, brokers should map lenders by approval speed and documentation requirements, from fast-turnaround options to more document-heavy or low-doc lenders. This approach can help minimise bottlenecks as the reforms draw closer.
3. Pressure-test offset and redraw behaviour: Many SMEs park surplus cash in business loan offset accounts or redraw facilities between quarterly super payments. Brokers should review how average balances may change once super is paid alongside wages, as lower ongoing balances can influence lender assessments and perceived risk.
4. Educate business owners early on serviceability impacts: Many SME owners view Payday Super as a payroll or compliance issue, not a borrowing one. Proactively walking clients through how the reforms affect lender assessments, particularly cash flow timing, surplus calculations and working capital limits, can help avoid credit-stage surprises.
5. Reframe the narrative around working capital: Continue to position working capital facilities as a proactive cash flow management tool rather than distress finance. Normalising the early and planned use of debt to smooth timing gaps may help preserve serviceability ahead of the reforms taking effect.

[Related: ATO enforcement ramp-up fuels mounting SME pressure]