Non-bank borrowing demand by Australian SMEs has increased to a record high of 47%, up 50% year on year and a threefold increase since September 2018.

The headline finding was contained in the latest round (Q1, 2023) of the bi-annual SME Growth Index by ScotPac, Australia’s leading non-bank business lender. It is the highest non-bank lending preference figure recorded since the SME Growth Index report commenced in September 2014.

Related findings from the report include:

  • 60% of SMEs are planning to invest in their business in the next 6 months, up from 55% in March 2022.
  • SMEs with declining growth are more likely to seek out a non-bank lender with almost 90% of this category turning away from banks.
  • Of those SMEs not considering a non-bank lending solution, 41% cited a lack familiarity with the business or brand as the major factor.

Despite the sustained growth in non-bank lending preference in recent years, 10% of SMEs said they do not know how they will finance new business investment, which provides an avenue for further growth in non-bank market share.

The table below provides deeper insights into what is driving SME finance decision making.

Biggest barriers to obtaining finance Key reasons to seek non-bank lending
45% – Compliance time and effort 23% – Ease of onboarding
33% – Personal security requirements 20% – Avoid using non-property assets as security
28% – Strict bank lending criteria 16% – Avoid using property as security


ScotPac CEO, Jon Sutton, said the non-bank borrowing findings mirrored demand from SMEs for ScotPac’s services.

‘The significant growth in these non-bank lending figures are consistent with large increases in ScotPac’s client numbers and total lending over the past five years,’ Mr Sutton said.

‘Many of our new customers have bypassed or transferred their business from banks that are more deeply focused on the residential lending market, rather than fast and flexible business finance.

‘Despite slowing economic growth, surging inflation and rising interest rates there is clear evidence that small and medium business owners are still looking to invest in their businesses. That is great news for our broader economy as SMEs are the biggest employers in the country,’ Mr Sutton said.

Mr Sutton said the non-bank lending surge provided finance brokers with a golden opportunity to diversify into business lending or expand their existing commercial practices.

‘When you couple growing demand for non-bank lending with the time pressures faced by small and medium business owners, the role of the business broker has never been more important’, Mr Sutton said.

‘ScotPac has the breadth of products and experience to help more businesses in more situations than any other non-bank lender, including invoice finance, asset finance and online business loans.

‘Our new Partner Portal provides brokers and advisors with all the tools they need to quickly find the right solution for their clients and grow their own business,’ Mr Sutton said.

The news that most Australian SMEs have short term plans to invest in their businesses aligns with new data from the Australian Bureau of Statistics that found the initial capital expenditure plans of Australian businesses in 2023/24 were 11% higher than for 2022/23.

About the SME Growth Index

ScotPac’s bi-annual SME Growth Index, is Australia’s longest running research report on SME sentiment towards revenue growth prospects.

The Round 18 research was conducted by East & Partners who interviewed 720 SME enterprises with annual revenues of A$1-20 million in February 2023.

SMEs surveyed have operated continuously for 14.2 years and manage an average of 59 full time employees.

Sectors represented in the survey included Manufacturing (14%), Property & Business Services (14%), Retail (11%), Wholesale (11%), Personal / Other Services (10%), Construction (10%) and other industries including Transport & Storage, Mining, Agriculture, Media, Hospitality, Finance & Insurance (non-bank) and Electricity.

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 revenues. For 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 from Invoice, Trade or Asset Finance to Home Loans and Business Loans.