(28 October 2026 – Australia) The proportion of small businesses planning to use non-bank finance for new business investment has hit a record level, according to newly released research.
A record proportion of small and medium-sized enterprises (SMEs) plan to turn to non-bank lenders to fund growth and expansion, according to ScotPac’s latest SME Growth Index.
More than half (59 percent) of the SMEs directly interviewed plan to invest over the next six months, with the majority (61 percent) saying they’d use non-banks to do so, Ben Squires reports for BrokerDaily.
The latest figure is more than triple the 19 percent of investing SMEs that planned to use non-bank finance in 2019. 31 percent of SMEs planning to use bank lending reported no change from six months ago, remaining below the peak of 48 per cent recorded in 2023.
The research, based on direct interviews with 727 SMEs with annual revenues of $1 million to $20 million conducted by East & Partners, found Australian small businesses had been operating for 17 years and employed 50 full-time equivalent staff.
“The results reflect a growing shift in SME financing. SME investment intentions have remained steady for the past five years with two-thirds of SMEs planning to invest; however, the way businesses are choosing to finance that investment has changed” commented ScotPac CEO Clare Morgan, appointed in September following Jon Sutton’s retirement,
“The reasons business owners are using non-bank finance include flexibility, greater choice, speed of decisions and ongoing support that reflects their circumstances.
“They recognise the value of funding solutions that can move with their business cash flow and provide the flexibility they need to invest with confidence.”
The proportion of SMEs planning to raise new equity has also increased sharply, rising from 11 percent in 2014 to 32 percent in the latest round.
“Using retained funds to invest in growth may make sense in some scenarios, but businesses need to ensure that investment does not compromise day-to-day liquidity. A working capital buffer helps businesses meet operating costs, manage unexpected expenses and absorb delays in customer payments. Investment capital allows them to pursue opportunities for growth” Morgan added.
The highlighted challenges facing weaker-performing businesses and found almost three in four Australian small businesses are facing severe cash flow impacts from Payday Super changes.
A record 16 percent of SMEs expecting flat or declining revenue said they were unsure which funding method they would use to finance future investment.
“Businesses facing weaker revenue conditions can find it harder to access finance at the very point they need flexibility and support. That is why planning and diversification matters. SMEs should assess their funding capacity and available options well before making a major investment decision.”