SME lending stagnates as Australian economy remains sluggish: Banjo Loans

Australian SMEs show lending hesitation in late 2024, reflecting economic struggles despite growth in Victoria and Queensland

SME lending stagnates as Australian economy remains sluggish: Banjo Loans

Australian small and medium-sized enterprises (SMEs) showed little enthusiasm for borrowing in the final quarter of 2024, reflecting persistent economic challenges and cautious consumer spending patterns.

The latest data from Banjo Loans' SME Business Barometer reveals a virtually flat lending landscape, with loan applications shifting less than 1% throughout the year.

The December quarter revealed that loan applications dropped 15% compared to the previous quarter. On the other hand, loan amounts increased by 16% due to larger businesses taking on bigger commitments.

"SMEs are feeling the weight of the ongoing economic challenges, with most businesses still wary of borrowing or investing," said Banjo Loans CEO Guy Callaghan.

Victoria saw a 27% increase in loan applications, while Queensland maintained its resilience with a 39% surge. However, Western Australia remained flat, and South Australia experienced a 43% decline in loan applications.

Meanwhile, the Transport, Postal and Warehousing industry faced challenges, with loan arrears jumping 147% during the December quarter. Retail traders, despite increasing their loan applications by 8%, saw their arrears grow by 16% during what is typically a strong trading period.

The 2025 outlook remains cautious. Most businesses are maintaining vigilant repayment habits while being reluctant to take on new debt.

"While some regions like Victoria are seeing a slight uptick, the overall mood across the country remains one of caution. The lack of a typical end-of-year rush further indicates the ongoing strain businesses are under," Callaghan said.