Outstanding credit to small and medium businesses has reached a record $750 billion amid heightened lender competition
Bank competition for small business customers has driven lending margins to their lowest level in five years, according to a report released by the Australian Banking Association (ABA).
The ABA's latest industry report on small and medium enterprises found that the margin banks charge above the cash rate on small business loans has fallen to a five-year low, with 40% of small businesses having sought finance from their bank.
Outstanding credit has reached $750 billion, up from $567 billion in 2023, while one in four small businesses reported faster credit approval times due to new technology and systems.
"We are seeing banks compete hard to win small business customers and that is translating into more competitive pricing for those businesses," said Simon Birmingham (pictured right), chief executive of the Australian Banking Association.
"This is competition working exactly the way it should, giving owners more choice about who they bank with and more finance to reinvest into their business."
Birmingham described Australia's 2.7 million small and medium businesses as critical to the economy, adding that banks were providing the support needed to operate, grow, and create employment.
He pointed to the record $750 billion in outstanding credit as an important source of financing for working capital, equipment, and expansion opportunities.
Beyond lending, Birmingham said banks were also supplying the payment infrastructure small businesses rely on daily, including fraud and scam protections, transaction accounts, online banking, payments services, and cash flow tools.
"Support isn't just there for the good times," he stressed. "When the going gets tough, banks have dedicated teams to assist small business customers navigate through harder economic conditions."
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.
