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Overall business credit demand rose 2.3 per cent year-on-year in the December quarter, according to the latest Equifax Business Market Pulse, with loan demand up 4.1 per cent and trade credit demand down 4.9 per cent compared to Q4 2024.
Released on 16 February 2026 by technology and data company Equifax, the Q4 2025 data indicates a multi-speed recovery across the Australian business landscape. Large enterprises have driven much of the uplift in credit activity while small and medium-sized enterprises (SMEs) are continuing on a more gradual path.
Large businesses have recorded significant increases in credit demand, with some sectors reporting trade credit growth of up to 19.4 per cent, year-on-year.
Meanwhile, the broader view of the SME sector shows a steady, albeit gradual, recovery. Although SMEs are trailing the growth seen in larger enterprises, their demand for credit continues to rise.
However, longer-term trends show small business borrowing remains on a recovery pathway, with Q4 2025 credit demand 9 per cent below Q1 2022 levels.
Brad Walters, general manager, commercial at Equifax in Australia, said 2026 could mark the beginning of an SME recovery.
Observing the trends, Walters said, “The +4.5 per cent year-on-year increase in SME demand in Q4 2025 is a positive signal – though it reflects a more measured recovery pace compared to larger enterprises.
“While large-scale businesses appear to be accelerating their credit appetite more quickly, SMEs appear to be navigating a steadier path upward as they balance growth with external factors such as the pressures of inflation. They don’t always have the means to absorb potential shocks as easily as their larger competitors, so they’re choosing a steadier, more sustainable climb back to the top.”
In analysis from non-bank lender Lumi, it was found that SMEs are entering 2026 with strong financial performance but also thin cash buffers and rising compliance pressures.
Broker Daily has reported on issues that are impacting SMEs, such as Australian Taxation Office enforcement and the upcoming Payday Superannuation reforms.
Another survey undertaken by financial analysis company CreditorWatch found that SMEs were delaying major business decisions, but are still focused on growth and expansion.
Business credit scores hit three-year high
Equifax insights reveal business loan demand increased 4.1 per cent year-on-year in Q4 2025, while business loan quality improved by two points to reach a three-year high.
Walters said the past quarter reflected a shift in the market mix.
“When we look at the past quarter, it appears to be a story of a change in the market mix. We’ve seen more enquiries from larger businesses, which often have more reserves and carry higher credit scores.
“This shift in the overall enquiry profile – where the larger players are currently more credit active than smaller players – is what I see driving this upward trend in credit quality. In practical terms, this shows that the credit quality of the mid-market and larger businesses overall remains quite resilient,” Walters said.
The Equifax Business Market Pulse Q4 2025 also found an overall year-on-year decline of 4.9 per cent in trade credit demand, indicating businesses are not making as many transactions as they were at the same time last year.
Large hospitality, construction and retail businesses drive growth
Sector-level data highlighted notable differences between large enterprises and SMEs across hospitality, construction and retail in Q4 2025.
Hospitality showed one of the largest gaps. Credit enquiries from large hospitality businesses drove increased demand across trade credit (up 19.4 per cent), business loans (up 9.1 per cent) and asset finance (up 5 per cent).
“The hospitality sector shows one of the widest discrepancies in overall demand for large businesses compared to SMEs in Q4 2025. While trade credit demand in large hospitality businesses increased by +19.4 per cent year-on-year, overall credit demand growth from SMEs (+1.9 per cent year-on-year) was marginal.
“While insolvencies in the hospitality sector remain high overall, the past quarter showed an encouraging -9 per cent reduction compared to Q4 2024, in addition to a -1.5 day reduction in Days Beyond Terms (DBT) for trade payments over the same period,” Walters said.
In the construction sector, insolvencies remained high but relatively unchanged, year-on-year. Credit demand, however, diverged between large and small operators.
Walters said: “The demand we are seeing could suggest big builders are confidently securing materials for their project pipelines, driving a +6.6 per cent year-on-year (versus Q4 2024) increase in trade credit.
“Now, during this same time period, small construction businesses appear to be avoiding broad debt, seen by a slight reduction (-0.7 per cent) in overall demand, and only borrowing for specific tools via asset finance (+4 per cent).”
In retail, national demand from large retailers increased 7.9 per cent year-on-year, compared to 0.7 per cent growth among SMEs in Q4 2025. Large NSW retailers were particularly active, increasing their business loan enquiries by 25 per cent.
Walters added: “While we have seen strong demand growth among large retailers, the wider sector still shows some signs of pressure, with the past quarter revealing a substantial +64 per cent increase in retail insolvencies year-on-year.”
[Related: Brokers urged to rethink SME strategy]