Lower rates trigger renewed demand for unsecured finance among SMEs
Small business lending volumes rose 40% year-on-year during the three months following the Reserve Bank of Australia’s (RBA) February interest rate cut, according to SME lender OnDeck Australia.
The uptick in borrowing comes as consumer sentiment trends upward and small business owners react positively to the easing interest environment and broader signs of economic steadiness.
“Lower interest rates are a key driver of both consumer and business confidence,” said Cameron Poolman (pictured above), chief executive of OnDeck Australia.
Research, conducted in March with over 500 small business owners nationwide as respondents, indicates that more than half of small business operators considered interest rates a critical concern ahead of the federal election. Meanwhile, nearly two-thirds remained cautious about rising operational expenses.
Still, the central bank’s 0.25% rate cut in February appears to have offered some respite, with OnDeck reporting strong loan demand across sectors. The trend is expected to continue after a second 0.25-point reduction in May.
“Across our portfolio, we’re seeing growth across all industries, especially in retail trade with an increase of almost 50%,” Poolman said.
Other sectors showing robust growth included professional and technical services (36%), construction (22%), and hospitality (14%).
“Business owners are using funds for everything from hiring staff and purchasing stock to investing in productivity-enhancing technology,” Poolman said.
To meet growing demand, OnDeck said it would continue to offer rapid, unsecured loans through its Lightning Loans service, which provides small businesses with near-instant funding access.
“This speed of funding enables small businesses to embrace opportunities when they arise – whether that’s negotiating supplier discounts or managing seasonal demand,” Poolman said.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
