More than half of Australia’s small-to-medium enterprises (SMEs) intend to fund new investments with a non-bank lender – a remarkable turnaround from just 7% in 2014.

The level of non-bank lending demand to fund new SME investment surged to an all-time high of 55% in the first half of 2025, a 7% year-on-year increase. The key drivers identified by SME owners and operators included faster approvals, more flexible lending criteria, and a greater range of tailored funding options.

By contrast, the share of SMEs that plan to use bank lenders dropped sharply from 42% to just 30% in the past 12 months. That was split by 21% who intend to stick with their main relationship bank, and 9% who will look to a secondary banking lender.

The headline findings are contained in the latest edition of ScotPac’s bi-annual SME Growth Index Report. Other notable findings included:

  • Confidence remained strong across the SME sector with 59% of businesses planning to invest for growth over the next six months.
  • The use of private credit is on the rise with one in four SMEs planning to use some form of private credit to fund an average of 10% of their business investment.
  • 94% of SMEs said they intended to use their own equity to fund at least part of planned business investment.
  • Just 5% of SMEs were unsure about how they would fund investment plans.

ScotPac CEO, Jon Sutton, said the evolving SME finance landscape presented a great opportunity for brokers to guide their clients through a growing and competitive market.

“SMEs have more choice than ever when it comes to finance solutions, and they’re clearly voting with their feet,” Mr Sutton said. “That scenario is creating more opportunities for brokers who are uniquely placed to add value by identifying the right solution for each SME’s needs.”

According to Deloitte’s Value of Mortgage and Finance Broking 2025 Report, the annual growth in the volume of commercial and asset finance loans written by brokers was more  than 20%.

“As Australia and New Zealand’s largest non-bank SME business lender, ScotPac has built an extensive network of broker partners across more than 35 years of operation.

“We look forward to continuing to grow these relationships in years to come as brokers take a more central role as trusted SME advisors.”

Mr Sutton also encouraged SMEs relying on their own equity fund new business investment to explore external funding options.

“It’s understandable that business owners view their own equity as a safe option, but in many cases working with a lender presents strategic advantages,” Mr Sutton said.

“With the right lending solution in place, SMEs can meet tight funding deadlines while preserving their working capital or savings buffers in case unforeseen costs arise.

“For example, ScotPac can help SMEs access finance by unlocking the value in their business assets to take advantage of time-critical opportunities like stock purchases or equipment upgrades.”

ScotPac has the largest range of fast and flexible lending solutions to support SMEs in any business scenario. Our core Invoice Finance product, otherwise known as Debtor Finance, was recently awarded The Adviser Magazine’s Debtor Finance Loan of the Year for a sixth time.

__________________________________________________________________________________________

 

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 22 research was conducted by East & Partners who interviewed 724 SME enterprises with annual revenues of A$1-20 million.

SMEs surveyed have operated continuously for an average of 15.6 years and manage, on average, 55 full-time employees.

Sectors represented in the survey included Property & Business Services (14%), Manufacturing (13%), Wholesale (12%), Retail (10%), Transport & Storage (10%), Personal & Other Services (10%), Construction (10%) and other industries including Mining & Resources, Agriculture, Media & Telco, Accommodation, Cafes & Restaurants, Finance & Insurance (non-bank) and Electricity, Gas & Water.

_______________________________________________________________________________________

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 more than 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 and Business Loans.

 

For more information contact:

Todd Hayward
Mob: 0412 205 151