New Equifax data reveals what the shift in Australian business loan demand means for brokers
Australian businesses are taking on more debt, but not to grow.
Australian business loan demand jumped 11.3% year-on-year in August 2026, according to the Equifax Business Market Pulse. At the same time, asset finance demand fell 12.7%.
And as major banks pull back from complex or distressed commercial scenarios, SME owners are turning to brokers for non-bank solutions – refinancing tax debt, restructuring credit lines, bridging cash flow gaps.
Brad Walters, General Manager of Commercial at Equifax (pictured above), said the shift has accelerated since mid-year.
"What began mid-year as a cautious delay on equipment upgrades has now developed into a widespread asset capital pullback," Walters said. "Across every major industry sector, businesses appear to be extending the operational life of existing machinery, vehicles, and IT infrastructure rather than taking on new long-term debt liabilities."
What is driving Australian business loan demand in 2026?
Despite higher application volumes, average applicant credit scores fell by around two to three points year-on-year – a sign that more higher-risk businesses are seeking credit.
"Looking closely at underlying risk indicators suggests that this uptick in borrowing could be being driven by financial management rather than business expansion," Walters said.
Large businesses led the national increase, with loan demand up 19.2% year-on-year. SME loan enquiries rose a more modest 4.3%, alongside a 14.5% fall in SME asset finance applications.
The state breakdown shows NSW large business loan demand up 27.1% year-on-year, with Western Australia up 25.6% and South Australia up 22.6%. Victoria recorded the most modest large business loan growth at 10.7%. On asset finance, declines were recorded across every state except WA, where large business asset finance edged up 1.2%.
For brokers building their commercial lending capability, the client mix is shifting toward working capital and liquidity management rather than growth financing. That profile requires non-bank lender relationships and familiarity with working capital products.
What does the ATO defaults spike mean for brokers?
Equifax recorded 36,900 active ATO tax defaults nationally as at August 2026, up 22.6% year-on-year. NSW rose 24.2%, Victoria 24.4%, Queensland 22.8%.
ATO defaults in the construction sector rose 25% year-on-year. SME construction firms recorded the steepest asset finance decline of any industry group, down 23.5%.
In the broader production sector – which covers agriculture, manufacturing, mining, logistics, and wholesale trade – business loan demand rose 4.2% year-on-year while asset finance fell 17.4%.
"Faced with persistent overhead costs, trade payment delays, and tighter margins, smaller operators appear to be extending existing physical assets while securing credit lines to protect immediate balance sheet liquidity," Walters said.
For brokers with clients in the trades and building sectors, ATO debt is now a routine serviceability consideration. Outstanding tax obligations need to factor into credit assessments early.
That pattern is consistent with the surge in ATO-related business lending enquiries reported, which saw enquiries of this type rise 486% through LMG's network in FY2025.
As Australian business loan demand continues to diverge from asset finance, brokers can follow ongoing coverage of the SME lending sector as conditions develop through the rest of 2026.
