Australian SMEs are increasingly turning to non-bank lending solutions to support everyday business operations, with new research showing a structural shift away from traditional bank funding models.

New findings from ScotPac’s bi-annual SME Growth Index Report reveal that 34% of SMEs sourced non-bank lending in the past 12 months – not just for capital expenditure – but to support broader business borrowing needs including working capital, cash flow management and operational resilience.

In total, 92% of SMEs said they have either used, or they would consider partnering with a non-bank lender.

The research highlights growing demand for funding models that provide faster access to capital, reduced reliance on property security, and greater flexibility in uncertain economic conditions. Key findings included:

  • 34% of SMEs sourced non-bank lending in the past 12 months
  • Most SMEs sourced an average of 67% of borrowings from a single non-bank provider
  • 92% of SMEs are open to using a non-bank lender.

ScotPac CEO Jon Sutton said the results reflected a significant evolution in how SMEs are thinking about finance.

“Non-bank lending is no longer viewed as a niche or secondary funding option,” Mr Sutton said.

“More SMEs are integrating flexible funding solutions into their core business strategy to improve cash flow certainty, unlock working capital tied up in assets like invoices, and reduce pressure on personal balance sheets.”

The main drivers identified by SMEs for the shift to broader reliance on non-bank lending included:

  • Avoiding the use of non-property assets as security or personal guarantees (19%)
  • No requirement to use the family home as security (16%)
  • Streamlined onboarding and reduced administration processes (17%)
  • Faster access to funds (16%), particularly among micro-SMEs with less than 5 employees (21%)
  • Declining bank credit appetite (12%) – a figure that has grown fourfold since 2018.

Mr Sutton said businesses were increasingly looking beyond traditional term loans towards more adaptive funding structures linked directly to business activity and cash flow.

“Asset-based lending solutions such as invoice finance and working capital facilities allow businesses to access funding based on the strength of their receivables and trading activity, rather than relying solely on property-backed lending,” he said.

“That flexibility is becoming increasingly valuable as SMEs navigate rising operating costs, uneven trading conditions and tighter credit environments.”

Mr Sutton said ScotPac had more than 35 years of expertise in helping SMEs rethink and re-set their business funding mix.

“Businesses are becoming more strategic about liquidity, cash flow resilience and reducing concentration risk, and ScotPac has the broadest range of finance solutions to support them,” he said.

“Brokers who understand asset-based lending and working capital options are increasingly well positioned to guide SMEs through changing market conditions.”

ScotPac said demand for flexible funding solutions continued to grow across sectors including transport, manufacturing, wholesale trade and professional services, where cash flow timing and working capital management remain critical business challenges.

About the SME Growth Index

  • Commencing in March 2014, ScotPac’s twice-yearly SME Growth Index is Australia’s longest-running research report on SME sentiment towards revenue growth prospects.
  • The Round 24 research was conducted by East & Partners who interviewed 728 SME enterprises with annual revenues of A$1-20 million.
  • SMEs surveyed have operated continuously for an average of 16.3 years and manage, on average, 51 full-time equivalent employees.
  • Sectors represented in the survey included Property & Business Services (14%), Wholesale (13%), Manufacturing (12%), Retail (10%), Transport & Storage (10%), Personal & Other Services (10%), Construction (10%) and other industries including Mining & Resources, Agriculture / Forestry / Fishing, Media & Telco, Accommodation, Cafes & Restaurants, Finance & Insurance (non-bank) and Electricity, Gas & Water.

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ScotPac is Australia and New Zealand’s largest non-bank SME business lender, providing funding to small, medium and large businesses from start-ups to enterprises exceeding $1 billion in revenues. For over 35 years, ScotPac has helped thousands of business owners succeed, offering fast and flexible funding. From simple to complex, small to large, start-up, growth or turnaround – ScotPac can help with a range of funding including Invoice Finance, Trade Finance, Asset Finance, Line of Credit, Business Loans and Asset Based Finance. ScotPac was recently awarded The Adviser Magazine’s Debtor Finance Loan of the Year for a sixth time.

 

For more information contact: Todd Hayward, Mob: 0412 205 151