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Overall demand for business loans increased 11.3 per cent in August compared with the same month last year, up from 6.2 per cent growth in July and 3.8 per cent in June.
At the same time, demand for asset finance fell 12.7 per cent year-on-year, following a 9.1 per cent decline in July and a 2.4 per cent fall in June.
Asset finance pullback deepens
The decline in asset finance was felt across the major sectors, with demand falling 18.8 per cent in the lifestyle sector, 13 per cent in services and 17.4 per cent in production.
The pullback was also recorded among both large businesses and SMEs, with asset finance demand falling 10.5 per cent and 14.5 per cent respectively.
Equifax general manager of commercial Brad Walters said the data showed a “strong rebound” in national business loan demand alongside a further decline in asset finance applications.
“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.”
The production sector recorded a 17.4 per cent annual decline in asset finance demand, including a 23.5 per cent fall among SME construction businesses.
There were some exceptions at a state level, with large-business asset finance demand in WA increasing 1.2 per cent year-on-year.
Large businesses lead loan demand
The increase in business loan demand was led by large businesses, where enquiries rose 19.2 per cent year-on-year, compared with a 4.3 per cent increase among SMEs.
At a state level, large-business loan demand increased 27.1 per cent in NSW and 25.6 per cent in WA.
The increase in loan demand was recorded alongside a decline of around two to three points in average applicant credit scores compared with a year earlier.
Walters said the decline in credit scores alongside higher enquiry volumes suggested a higher number of lower-scoring or higher-risk applicants were seeking credit.
“Seeing the national business credit scores trend downward during a period of higher enquiry volume suggests a higher number of lower scoring, or higher risk, applicants are seeking credit, which can indicate liquidity friction across the market,” he said.
Banks ramp up business lending
Signs from the banks are also showing significant growth in business lending.
The Australian Banking Association has also reported record levels of SME credit, with bank lending to small and medium-sized businesses reaching $750 billion in April 2026, compared with $567 billion in April 2023.
Major banks have seen their loan books swell over the 2026 financial year.
The Commonwealth Bank of Australia’s (CBA) business lending book increased by 13 per cent over the 12 months to June 2026, from $159 billion to $180 billion, Australia and New Zealand Banking Group (ANZ) reported a 4 per cent rise in business and private bank loans over the June quarter to $71 billion, while National Australia Bank saw business lending increase by 2 per cent over the same period.
Judo Bank, which caters specifically to SMEs, reported an 18 per cent increase in its lending book to $14.7 billion for FY26, up from $12.5 billion in June 2025 and $6.1 billion in June 2022.
Services lead sector growth
The services sector recorded the strongest increase in business loan demand, with enquiries up 20 per cent year-on-year.
Large businesses in the sector recorded a 48 per cent increase, while SME demand rose 0.7 per cent.
Asset finance demand across the services sector fell 13 per cent.
Business loan demand in the lifestyle sector increased 6.3 per cent, while production sector demand rose 4.2 per cent.
Within housing and utilities, large-business loan demand increased 13.4 per cent, while SME demand fell 4 per cent.
The production sector recorded a more modest 4.2 per cent increase in business loan demand, with large businesses up 4.8 per cent and SMEs up 3.6 per cent.
WA recorded the strongest increase in production-sector large-business loan demand, rising 23.7 per cent, while Queensland recorded a 2.2 per cent decline.
Payment delays edge higher
Equifax's latest payment data showed 90.5 per cent of invoices were paid on time in July, up one percentage point from June.
The share of invoices between 31 and 60 days late, however, rose to 1 per cent, marking the fifth consecutive monthly increase.
A further 0.3 per cent of invoices were between 61 and 90 days late, while 0.7 per cent were more than 91 days overdue.
ATO defaults climb
Equifax recorded 36,900 active ATO defaults in August, an increase of 22.6 per cent compared with August 2025.
ATO defaults increased 24.2 per cent year-on-year in NSW, 24.4 per cent in Victoria and 22.8 per cent in Queensland.
Mining businesses recorded a 37 per cent increase in ATO defaults, while administrative services recorded a 31.2 per cent rise.
Construction businesses recorded a 25 per cent increase, while manufacturing defaults increased 23.2 per cent.
[Related: Payday Super begins to bite for SMEs]
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