Amid ongoing economic challenges, fresh data from non-bank lender Banjo Loans has revealed that Australian small businesses are embracing longer-term loans.
Banjo’s latest small-to-medium-enterprise (SME) Business Barometer for the first quarter of the 2025 financial year also noted a 43 per cent increase in business loan applications from SMEs compared to the previous quarter, marking a growth in loan applications for the first time in the past six reporting periods.
At the same time, the loan value increased by slightly more at 45 per cent, according to the report.
Banjo Loans CEO Guy Callaghan attributes this jump to the extension of loan terms being provided by lenders recently.
“The spike in applications this past quarter demonstrates that small-business owners like the idea of more manageable repayment sums being spread over a longer period,” Callaghan said.
The report however also acknowledged that SME borrowing capacity remains limited.
“Many SMEs are still experiencing financial hardship, and while borrowing trends are shifting, SMEs in QLD, WA and the Northern Territory are bucking that trend, with fewer loan applications submitted,” Callaghan said. “It’s also important to note that many SMEs are still in recovery mode following the significant year-on-year decline in total loan value we reported on for the final quarter of 2024.
“The latest data reveals that SME businesses in Victoria, South Australia and New South Wales are borrowing more, while in certain sectors – particularly accommodation and food, IT and media, administration services and healthcare – we’ve seen significant resilience and borrowing growth,” he added.
Callaghan pointed out that even as some industries are still facing headwinds, pockets of the services sector are thriving, with SME business providers of energy, gas and waste services significantly increasing their loan submissions.
“This suggests that while the overall economic picture may be subdued, there are areas of strength that could be harnessed for growth,” he added.
Notable among the sectors that increased their borrowing capacity are Construction (29 per cent), Electricity Gas Water and Waste Services (167 per cent), Financial and Insurance (95 per cent) and Transport, Postal and Warehousing (73 per cent).
The report noted that while the environment remains tough, the uptick in applications has indicated a sense of readiness among some SMEs to adapt and seek new financing solutions.
“To fully capitalise on these positive signs, a proactive approach, including potential interest rate cuts, could provide the necessary boost to invigorate the SME sector,” Callaghan said.
