Category: Research and Reports

Access to affordable finance is one of the most discussed and least solved challenges in the small business sector. Despite years of government attention and a proliferation of fintech lenders, many small businesses still find it difficult to access working capital and growth finance on terms that make commercial sense.

Bank Lending Remains Constrained

Major bank lending to small and medium businesses has grown more slowly than overall business credit, with lenders citing concentration risk and the administrative costs of small loan origination as key factors. The Reserve Bank of Australia’s Financial Stability Review consistently notes the disproportionate reliance of small businesses on personal assets as collateral for business lending.

The Rise of Alternative Finance

Invoice financing, equipment leasing, revenue-based financing and peer-to-peer lending platforms have grown substantially. ASIC’s regulatory frameworks have enabled a new generation of lenders, though interest rates from alternative providers remain significantly higher than bank rates.

Government Guarantee Schemes

Government-backed lending initiatives have provided some improvement in access. Current programs are summarised on the business.gov.au grants and finance finder tool.

SBTC’s Position

SBTC has called on the government to expand the scope of the Small Business Loan Guarantee program and to work with lenders to develop unsecured lending products that do not require residential property as collateral. We will continue to advocate for data-driven reforms that improve capital access for the sector.

Each year, SBTC surveys its financial membership to understand the challenges, opportunities and outlook of Australia’s small business community. The 2025 survey drew responses from 847 members across all states and territories and every major industry sector.

Operating Costs Remain the Top Concern

For the third consecutive year, rising operating costs — particularly energy, insurance and commercial rent — were identified as the top business challenge. Sixty-eight percent of respondents rated cost pressures as significant or severe, up from 61% in 2024.

Digital Adoption Accelerating

A notable positive: 54% of respondents had adopted at least one new digital tool in the past 12 months, with cloud accounting software, AI-assisted customer service tools and digital invoicing among the most commonly cited.

Workforce Challenges Easing Slightly

After two years of acute labour shortages, 43% of businesses reported that staffing was easier than last year — the first improvement recorded since 2020. However, finding skilled workers in trades, health and technology remained significantly more difficult than other categories.

These findings align with broader economic data published by the Reserve Bank of Australia and the Australian Bureau of Statistics, both of which have noted the resilience of the small business sector through recent economic cycles.

Outlook for 2025

Despite ongoing cost pressures, business confidence was modestly positive: 52% of respondents expected revenue to be about the same or better than 2024. The full survey report with industry and state breakdowns is available to financial members in the SBTC resources portal.

Access to affordable finance is one of the most discussed — and least solved — challenges in the small business sector. Despite years of government attention and a proliferation of fintech lenders, many small businesses still find it difficult to access the working capital and growth finance they need on terms that make commercial sense. Here’s what the current data tells us.

Bank Lending Remains Constrained

Major bank lending to small and medium businesses has grown more slowly than overall business credit, with lenders citing concentration risk, loan-to-value ratio concerns and the administrative costs of small loan origination as key factors. The Reserve Bank of Australia’s Financial Stability Review consistently notes the disproportionate reliance of small businesses on personal assets (particularly residential property) as collateral for business lending.

The Rise of Alternative Finance

Invoice financing, equipment leasing, revenue-based financing and peer-to-peer lending platforms have grown substantially, particularly among younger businesses and those in sectors with strong receivables. ASIC’s regulatory sandbox and fintech licensing frameworks have enabled a new generation of lenders, though interest rates from alternative providers remain significantly higher than bank rates.

Government Guarantee Schemes

The SME Recovery Loan Scheme and its successors have provided some improvement in access, particularly during and after the COVID period. Current government-backed lending initiatives are summarised on the business.gov.au grants and finance finder.

SBTC’s Position

SBTC has called on the government to expand the scope of the Small Business Loan Guarantee program and to work with lenders to develop unsecured lending products that do not require residential property as collateral. We will continue to advocate for data-driven reforms that improve capital access for the sector.

Each year, SBTC surveys its financial membership to understand the challenges, opportunities and outlook of Australia’s small business community. The 2025 survey drew responses from 847 members across all states and territories and every major industry sector. Here are the key findings.

Operating Costs Remain the Top Concern

For the third consecutive year, rising operating costs — particularly energy, insurance and commercial rent — were identified as the top business challenge. Sixty-eight percent of respondents rated cost pressures as “significant” or “severe”, up from 61% in 2024.

Digital Adoption Accelerating

A notable positive finding: 54% of survey respondents had adopted at least one new digital tool in the past 12 months, with cloud accounting software, AI-assisted customer service tools and digital invoicing systems among the most commonly cited. This represents a significant uplift from 38% in 2022.

Workforce Challenges Easing Slightly

After two years of acute labour shortages, 43% of businesses reported that staffing was “easier than last year” — the first improvement recorded since 2020. However, finding skilled workers in trades, health and technology remained significantly more difficult than other categories.

These findings align with broader economic data published by the Reserve Bank of Australia and the Australian Bureau of Statistics, both of which have noted the resilience of the small business sector through recent economic cycles.

Outlook for 2025

Despite ongoing cost pressures, business confidence was modestly positive: 52% of respondents expected revenue to be “about the same or better” than 2024. The full survey report, including industry and state breakdowns, is available to financial members in the SBTC resources portal.