Opens in a new tab

The Australian SME credit landscape 

Why has bank business credit fallen behind housing?

Over the past three decades Australian banks have steadily reallocated credit away from business and towards housing. Business credit was more than twice housing credit in the early 1990s; housing has since overtaken it and now sits at almost twice the business book.

The change is structural. It is driven in large part by capital rules that make mortgage lending more attractive than business lending for the banks. It has left SMEs competing for a shrinking share of bank balance sheets.

Australian bank credit, housing versus business, 1990 to 2026 ($b) – Housing, Business

Source: RBA D2 (Credit and Lending Aggregates).

Large business credit is growing twice as fast as small business credit

Since mid-2024, bank credit to large businesses has grown roughly twice as fast as credit to small businesses.

Banks are directing a disproportionate share of their business lending to larger businesses, and smaller businesses are increasingly underserved.

Bank business credit by borrower size, indexed to June 2024 (Jun-24 to Aug-26)

Source: RBA D14 (Lending to Businesses by size)

How much SME lending is secured?

Within the banking system, the overwhelming majority of SME lending is secured, most of it supported by residential property. Unsecured credit is a thin slice of the total, around 4.2% of bank SME lending.

Unsecured credit is the form best suited to a growing business. It can fund stock, wages and receivables, and the amount isn’t limited by the value of the owner’s property. This is the gap in bank lending where non-bank lenders have grown.

Note: Only includes bank lenders (authorised deposit-taking institutions, or ADIs, the RBA-regulated banking system) and registered financial corporations with $2 billion business credit or more, as per RBA D14. The RBA notes that non-bank unsecured lending is not well captured in regulator data, so this view understates the total market the next section sizes.

Bank SME lending: total versus unsecured (Aug-26)

Source: RBA D14.1 (Aug 2026); RBA Bulletin Oct 2025, Graph 12.

Who are the largest non-bank SME lenders in Australia?

Non-bank lenders sit largely outside the data collected by regulators. Combining the bank figures with non-bank working-capital books reported to ASIC gives an approximate view of the total unsecured SME credit market.

On those filings, total non-bank lending accounts for around 25% of total SME unsecured lending in Australia. Shift is the largest non-bank provider of unsecured lending to Australian SMEs, with a ~10% share based on the available data.

Source: Bank unsecured from RBA (D14.1; Bulletin Oct 2025); non-bank from ASIC filings plus Shift internal data. Unsecured defined as not real property secured. We identified all AFIA OSBL Code signatories and other known providers of unsecured working capital finance in Australia. For those meeting ASIC’s large proprietary company thresholds (at least two of: $50m+ consolidated revenue, $25m+ consolidated gross assets, 100+ employees), we aggregated unsecured lending from their most recent ASIC filing, using segment information to isolate the unsecured portion where disclosed. Lenders not separately disclosing this split were excluded. Shift’s figure is based on latest internal data, not an ASIC filing. Bank figures are sourced from the RBA D14 and include credit from both bank lenders and registered financial corporations with $2 billion business credit or more. Shift and Other non-bank figures only include non-bank lenders with less than $2 billion business credit – there is no overlap between the categories.

Combined unsecured SME credit market, bank and non-bank (~$9.7bn)

Why it matters

While non-banks have stepped into the gap created by the retreat of the banks, but the whole unsecured SME credit market, bank and non-bank combined, is still only $10bn. That is a small pool of credit for an SME economy that would be the country’s largest industry if counted as one.

The gap between what the SME economy contributes and the growth-oriented credit available to it is the central issue in the SME credit landscape.