The Australian business environment is showing strong signs of momentum this year. One of the clearest signs is the remarkable rise in small business lending, which has hit its strongest growth levels in years. By December 2024, business credit had grown by 8.9%, according to the Reserve Bank of Australia (RBA)—the sharpest increase since mid-2023.
But what is small business lending really telling us? More than just numbers on a chart, this growth signals a deeper shift in how entrepreneurs and established SMEs across Australia are thinking about finance. It reflects a new wave of confidence, improved access to capital, and a willingness to invest in innovation rather than simply staying afloat.
Let’s unpack the factors behind this lending surge and explore how small business lending options are reshaping the future of Australian enterprises.
Small Business Lending Growth: Key Numbers & Trends
The RBA’s latest data points to a story of resilience. Business credit growth reached 8.9% in December 2024, up from 8.6% the month before. While that rise may look modest, in lending terms, it’s a clear indicator of renewed business optimism.
Figures from Money.com.au reveal that small businesses are seeking loans averaging about $94,845.. That’s not pocket change. It tells us businesses are borrowing to do more than just cover bills; they’re aiming to scale operations, buy assets, and step into growth markets.
A breakdown of loan purposes shows where the money is flowing. Around 41% of loan applications are for business vehicles, while a large portion also supports day-to-day operations. The ABS (Australian Bureau of Statistics) also noted that by mid-2023, outstanding business finance was already nearly 9% higher than the year before, a trend that has only strengthened into 2025.
How Economic Recovery Boosts Small Business Lending Confidence
Australian SMEs have endured years of challenges, from global disruptions to local market pressures. Now, businesses are shifting from just surviving to focusing on growth. Take the ABS’s June 2025 update: business turnover inched up 0.1% (seasonally adjusted). While the increase is small, it adds to a positive picture. Roy Morgan’s July figures show a slight rise in Business Confidence, suggesting that many owners feel cautiously positive about what lies ahead.
Put simply, businesses are no longer standing still. They’re hiring, opening new locations, and exploring technology upgrades. That’s why business loans are becoming a lifeline for those looking to capture opportunities quickly.
The RBA Rate Environment Creating Opportunities
The role of interest rates can’t be ignored. Since April 2022, SME loan rates have risen by about 365 basis points. Yet over the past year, they’ve remained relatively stable.
This stability has been a relief for small businesses. If interest rates fluctuate too much, businesses find it hard to make long-term plans. Now, with a more predictable environment, Australian lenders are offering SMEs the chance to map out financing strategies with confidence.
Whether it’s buying new machinery, investing in staff training, or smoothing out seasonal income gaps, stability gives businesses the certainty they need to borrow responsibly.
Technology Investments Fuel Small Business Lending Demand
One of the strongest forces pushing lending demand higher is technology. Think about it, every business today needs some form of digital infrastructure. Whether it’s a cloud system, an AI-powered tool, or a secure point-of-sale platform, technology is no longer optional.
Yet, adopting technology requires upfront investment. That’s where small business lending companies and banks step in. Here are a few areas where SMEs are directing borrowed funds:
- Software subscriptions for e-commerce or accounting
- Hardware upgrades like computers and mobile devices
- Cybersecurity solutions to safeguard customer data
- Digital marketing campaigns and CRM systems
- Staff training is designed to make the adoption of modern tools smoother.
For many SMEs, these upgrades are about levelling the playing field with larger competitors. A local retailer, for example, might use a loan to build an online store, giving it access to national or even global customers.
How Businesses Use Finance in 2025
The applications of business finance are broader than ever. Today’s lending is being used strategically across different areas:
- Launching Startups – New entrepreneurs need seed funding for everything from equipment to inventory.
- Expansion – Existing businesses borrow to open new outlets or tap into online markets.
- Vehicles & Equipment – With vehicles making up 41% of loan requests, asset financing remains a key driver.
- Cash Flow Support – Seasonal industries like tourism and agriculture often need extra credit during slow months.
- Innovation & R&D – Companies use funding for product development and research.
- Digital Shifts – More traditional firms are financing websites, apps, and e-commerce setups.
This variety proves that lending is no longer just about plugging financial gaps—it’s about creating long-term growth pathways.
Alternative Lenders Taking the Lead
Traditionally, banks that lend to small businesses dominated the market. But things are changing. Alternative lenders and specialised finance providers are carving out significant space.
Why? Because they often provide:
- Faster approvals, sometimes within 24–48 hours
- Repayment plans that adapt to a business’s income flow.
- Simpler application processes with fewer forms
- Industry knowledge that allows them to tailor products
For busy business owners, these benefits can make the difference between seizing a growth opportunity and missing out. That’s why many are turning away from traditional banks in favour of agile providers.
Government Support Keeps Doors Open
Government-supported schemes are also playing a key role in driving the rise in lending. By offering guarantees, the government reduces risks for lenders, which in turn opens the door for businesses that may not qualify under strict bank requirements.
This is especially important for SMEs in regional areas or emerging industries where finance has historically been harder to secure. These initiatives ensure that lending for small businesses remains accessible across the board.
Success Stories Across Sectors
The lending surge isn’t just about statistics—it’s about real businesses achieving milestones. Across Australia:
- Manufacturers are upgrading machinery to boost output.
- Restaurants are expanding to multiple locations.
- Retailers are building e-commerce platforms.
- Professional service firms are investing in new talent and technology.
Each example shows how access to the right small business loan lender can accelerate growth and innovation.
What Lenders Need to Do Next
The takeaway for small business lenders is obvious: evolve with the times or lose relevance. To stay competitive, lenders must:
- Offer digital-first applications that are fast and user-friendly.
- Build industry-specific expertise to serve diverse sectors.
- Provide flexible products that match business models.
- Maintain strong compliance systems while staying efficient.
Focus on relationship building rather than one-off transactions.
Looking Ahead: A Positive Forecast
Industry experts predict that the rise in Australian small business lending will extend into 2026. With economic stability, supportive government measures, and entrepreneurial energy all aligning, the momentum is set to continue.
For business owners, this is an exciting time, and for financial brokers like Probiz Finance, it’s an opportunity to help SMEs secure the right financing. By connecting SMEs with the most suitable small business lending options, financial brokers help businesses unlock opportunities they might otherwise miss.
At its core, the lending boom is not simply about higher loan volumes. It reflects something deeper: a mindset shift among Australian entrepreneurs. Instead of holding back, they’re now leaning forward—investing, expanding, and innovating.
And that’s exactly why the surge in small business lending is shaping Australia’s economic future.
Disclaimer: Probiz Finance ABN 52 661 057 647 | Credit Representative Number 542838 is authorised under Australian Credit Licence No..- 384704. Your full financial situation and requirements need to be considered before any offer and acceptance of a loan product