SME loan applications spike as tough times continue: Banjo Loans Business Barometer
In the face of ongoing economic challenges, fresh data from leading non-bank lender Banjo Loans reveals Australia’s small businesses are embracing the increased benefits of longer-term loans.
Banjo’s latest small-to-medium-enterprise (SME) Business Barometer for the first quarter of the 2025 financial year shows a 43 per cent increase in business loan applications from SMEs compared to the previous quarter.
Banjo Loans CEO Guy Callaghan credits the lender’s recent product enhancement for the surge in applications.
“Two months ago, we extended the loan tenor for our Business Loan solutions from 36 months to 60 months,” Callaghan said. “The spike in applications this past quarter demonstrates that small business owners like the idea of more manageable repayment sums being spread over a longer period.”
The Barometer, which offers a comprehensive look at loan size history, industry breakdowns and the quality of applications, also acknowledges that SME borrowing capacity remains limited.
“Many SMEs are still experiencing financial hardship, and while borrowing trends are shifting, SMEs in QLD, WA and the Northern Territory are bucking that trend, with fewer loan applications submitted,” Callaghan said
“It’s also important to note that many SMEs are still in recovery mode following the significant year-on-year decline in total loan value we reported on for the final quarter of 2024.
“The latest data reveals that SME businesses in Victoria, South Australia and New South Wales are borrowing more, while in certain sectors – particularly accommodation and food, IT and media, administration services and healthcare – we’ve seen significant resilience and borrowing growth.”
Callaghan pointed out that even as some industries face headwinds, pockets of the services sector are thriving, with SME business providers of energy, gas and waste services significantly increasing their loan submissions.
“This suggests that while the overall economic picture may be subdued, there are areas of strength that could be harnessed for growth,” Callaghan added.
Other key findings from the Q1 Barometer include:
- Loan applications grew for the first time across the past six consecutive reporting periods.
- While loan application figures grew by 43 per cent, the loan value increased by slightly more at 45 per cent.
- Although the data suggests some improvement in economic outlook for SME businesses, it follows on from a quarterly report which had seen a 40 per cent year-on-year dip.
- Sectors that increased their borrowing this quarter include Construction (29%), Electricity Gas Water and Waste Services (167%), Financial and Insurance (95%) and Transport, Postal and Warehousing (73%).
- Agricultural and Fishery Services and Health Services’ borrowing capacity dipped by 44% and 9% respectively this quarter when compared to the previous Banjo SME Business Barometer Report.
Overall, while the environment remains tough, the uptick in applications points to a readiness among some SMEs to adapt and seek new financing solutions.
Callaghan emphasised the need for support to sustain this momentum, stating, “To fully capitalise on these positive signs, a proactive approach, including potential interest rate cuts, could provide the necessary boost to invigorate the SME sector.”
