Nearly a third of Australian small businesses sourced non-bank finance in the past year, new research finds
A structural shift in how Australian small and medium-sized enterprises (SMEs) access finance is under way, according to new data from ScotPac's bi-annual SME Growth Index Report.
The report found that 34% of SMEs sourced non-bank lending over the past 12 months — not solely for capital expenditure, but to support working capital, cash flow management and broader operational needs. In total, 92% said they had either used or would consider a non-bank lender, with most sourcing an average of 67% of their borrowings from a single non-bank provider.
The research points to growing demand for faster capital access, reduced reliance on property security, and greater funding flexibility amid uncertain economic conditions.
Key factors driving the shift included: avoiding non-property assets or personal guarantees as security (19%); no requirement to use the family home as collateral (16%); streamlined onboarding and reduced administration (17%); faster access to funds (16%), rising to 21% among micro-businesses with fewer than five employees; and declining bank credit appetite (12%), a figure that has grown fourfold since 2018.
"Non-bank lending is no longer viewed as a niche or secondary funding option," said Jon Sutton (pictured right), chief executive officer at ScotPac. "More SMEs are integrating flexible funding solutions into their core business strategy to improve cash flow certainty, unlock working capital tied up in assets like invoices, and reduce pressure on personal balance sheets."
Sutton noted a broader move away from traditional term loans towards funding structures tied more directly to business activity.
"Asset-based lending solutions such as invoice finance and working capital facilities allow businesses to access funding based on the strength of their receivables and trading activity, rather than relying solely on property-backed lending," he said. "That flexibility is becoming increasingly valuable as SMEs navigate rising operating costs, uneven trading conditions and tighter credit environments."
He also pointed to opportunities for brokers operating in this segment. "Businesses are becoming more strategic about liquidity, cash flow resilience and reducing concentration risk," he said. "Brokers who understand asset-based lending and working capital options are increasingly well positioned to guide SMEs through changing market conditions."
ScotPac said demand for flexible funding was continuing to grow across transport, manufacturing, wholesale trade and professional services — sectors where cash flow timing and working capital management remain ongoing operational challenges.
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