SME borrowing surged in the quarter ending 30 September 2026, according to the latest Banjo Loans SME Barometer, which recorded its highest loan activity since the survey began in 2023. The data illustrate a notable uptick in demand for financing among small and medium enterprises during that period.
Demand for financing hits new highs
Application volumes rose 27 percent quarter-on-quarter, climbing from 696 to 881 submissions, the report shows. This increase represents a substantial jump in the number of businesses seeking credit, suggesting that many firms either feel more confident about future growth or are responding to pressing cash-flow needs.
Funded loan numbers increased by nearly 15 percent, while the total count of loans drawn jumped 31 percent in the same period. The parallel rise in both approvals and actual drawdowns indicates that lenders are not only approving more requests but that borrowers are also moving forward to access the capital they have been granted.
Construction firms led the market, with the sector posting the strongest borrowing activity, followed by notable growth among retail trade, healthcare and professional services businesses. The prominence of construction reflects ongoing investment in building projects, while the gains in retail, health and services point to broader confidence across diverse parts of the economy.
Credit quality and arrears stay strong
The weighted average credit risk score for applications improved from 13.01 to 13.16, and funded loans rose from 12.62 to 12.73, indicating better borrower profiles. Higher scores suggest that the pool of applicants is, on average, presenting stronger financial fundamentals.
Conversion rates also strengthened, meaning a larger share of approved applicants proceeded to settlement. This trend shows that once credit is granted, more firms are following through to complete the financing process.
Arrears beyond 30 days remained near historic lows, with several industries reporting no material arrears despite the record-high lending volumes. Maintaining such low delinquency levels demonstrates disciplined repayment behavior across the board.
Victoria continued to be the largest funded state, while Queensland and Western Australia experienced robust growth in loan allocations. The regional spread shows that borrowing activity is not confined to a single market but is evident across multiple jurisdictions.
Businesses adopt a cautious borrowing strategy
He noted a trend of longer intervals between loan approval and drawdown, suggesting firms are waiting until capital is truly needed before tapping approved facilities. This behavior reflects a deliberate approach to managing cash reserves.
Fewer companies are opting to repay facilities early, reflecting a desire to keep cash on hand amid ongoing cost pressures and regulatory demands. The slowdown in early repayments points to a strategic choice to preserve liquidity.
Application declines rose alongside higher demand, with eligibility criteria and taxation issues cited as primary reasons for rejection. The increase in denials highlights that while more firms are applying, not all meet the tightened standards set by lenders.
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