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The latest SME Business Barometer report (2Q25), released by small-business lender Banjo Loans, has shown that loan applications and deal volumes among SME owners have “flatlined”, further reflecting continuing economic pressure.
According to the report, borrowing activity at the end of 2024 very much mirrored the same levels at the start of 2024, with new loan applications only shifting 1 per cent across the year.
Quarterly, loan amounts changed by 2 per cent and paint a picture of “flatlining business conditions – and confidence”, according to Banjo Loans.
Loan applications fell 15 per cent quarter on quarter, while loan amounts rose by 16 per cent as larger SMEs took on bigger loans. SMEs with higher turnovers are showing consistent confidence to take on debt, as businesses with revenues above $10 million increased their borrowing amounts to the highest levels within the year.
Banjo Loans CEO Guy Callaghan emphasised the ongoing uncertainty plaguing Australia’s small businesses, noting the weak loan application numbers and a “shift away from earlier hopes for recovery”.
“SMEs are feeling the weight of the ongoing economic challenges, with most businesses still wary of borrowing or investing,” Callaghan said.
“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.”
Meanwhile, SMEs are still managing to keep their debts in check and meet loan obligations following approvals.
According to Banjo Loans, most sectors have kept on top of business loans, with 30-plus day arrears remaining steady or declining. However, the transport, postal, and warehousing industry saw a December quarter “blow-out” with arrears, skyrocketing 147 per cent, while retailers saw arrears rise by 16 per cent in a typically strong trading period.
Callaghan said: “Serviceability and meeting eligibility criteria continue to be the highest reasons for loan rejections, particularly with the rise in businesses carrying unsustainable ATO debt.
“The ATO’s aggressive approach to recoup outstanding payments is likely contributing to this trend.”
Although 2024 saw flat increases in borrowing activity from beginning to end, Banjo Loans said that Aussie businesses will be “hoping 2025 sees the economy rise from its slumber”.
“Despite the difficult market conditions, this report shows that there are areas of opportunity for SMEs,” Callaghan said.
“To continue to support growth, a more proactive approach to financial support, potentially through targeted policy adjustments, will be key in encouraging more businesses to borrow and invest.”
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