SME Borrowing Rebound Puts Planning Ahead of Panic

According to reporting on the Banjo Loans figures published on 29 October 2026, loan application volumes rose 27 per cent from the previous quarter, increasing from 696 to 881 applications. Loans drawn rose 31 per cent, while funded loan numbers increased by nearly 15 per cent. Construction remained the most active sector, with stronger activity also recorded across retail trade, health care and professional services.

For business owners and finance managers, the important point is not just that borrowing demand increased. The pattern suggests some SMEs are using finance planning as a defensive tool: preserving liquidity, preparing for uneven trading conditions and keeping options open before a specific funding need becomes urgent. That can be a sensible discipline, but it also requires a clear view of borrowing costs, repayment timing and the assumptions behind future revenue.

The Barometer also highlighted why stronger demand does not automatically translate into easy approval. As more firms sought finance, declines also increased, with serviceability concerns, business loan eligibility criteria and taxation-related issues identified as key reasons applications were not approved. This is a reminder that lenders are likely to keep testing whether cash flow can support debt, especially where a business has existing obligations or irregular income.

There were encouraging signs in the reported data. Banjo indicated that credit quality improved across both applications and funded loans, and that arrears of more than 30 days remained near historic lows. However, the figures come from one non-bank lender’s dataset and should not be read as a complete measure of the entire Australian SME credit market. Conditions can vary materially by lender, industry, security offered, loan purpose and business size.

A practical takeaway is to separate access to capital from the decision to use it. Before drawing funds, businesses may benefit from modelling conservative revenue scenarios, allowing for tax and payroll obligations, and testing how business loan repayments would interact with supplier payments, seasonal sales and planned investment. In a market where borrowing demand is rising but approval standards still matter, preparation remains just as important as appetite.