SMEs Turn to Non-Bank Lenders to Fund Growth
A record 61% of Australian small and medium businesses planning to invest will use non-bank lenders, according to ScotPac's SME Growth Index.
Updated on Nov. 6, 2026 in Investing
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A record 61% of Australian SMEs planning to invest will turn to non-bank lenders to fund it, according to the September 2026 edition of ScotPac's SME Growth Index. The index is based on interviews with 727 SMEs with annual revenues of $1 million to $20 million, completed in July.
Why it matters
Payday Super is expected to hit cash flow for three in four businesses, and Lend analysis suggests the change could reduce SME borrowing capacity by as much as 15%. Rising tax and compliance pressures are pushing many small firms toward alternative funding sources.
The figures come from a survey of 727 SMEs with revenues of $1 million to $20 million, showing 61% of those planning to invest will use non-bank lenders and 37% will seek an external funding facility. Lend analysis projects Payday Super could reduce SME borrowing capacity by as much as 15%, and the impact on individual firms remains unclear.
The players
ScotPac
ScotPac is an Australian business finance provider that publishes the SME Growth Index tracking small and medium enterprise funding behaviour.
Australian National Audit Office
The Australian National Audit Office is the independent federal body that audits government finances and performance, and reported the $35.9 billion small business collectable tax debt figure.
Australian Taxation Office
The Australian Taxation Office is the federal agency responsible for administering tax collection and debt recovery across Australia.
The details
Among SMEs planning to invest, payroll funding (16%) and invoice finance (10%) were the most popular external options. Tax and compliance costs have now overtaken access to credit as the leading cash flow pressure, cited by 20% of businesses.
Timeline
East & Partners completed its interviews with SMEs in July 2026.
ScotPac released the September 2026 edition of the SME Growth Index.
Small business collectable tax debt reached $35.9 billion in 2024-25.
Market Dynamics
The ScotPac SME Growth Index's September 2026 edition shows a record 61% of investing SMEs turning to non-bank lenders, continuing its tracking of shifting funding patterns. Against a backdrop of Payday Super and rising tax debt, the trend points to small firms increasingly relying on non-traditional credit as conventional borrowing tightens.
For business owners weighing investment, non-bank lenders may be an option to consider alongside traditional bank credit, though costs and terms vary by provider. Those planning ahead should factor in how Payday Super and tax compliance costs could affect their cash flow and borrowing capacity.
The takeaway
Businesses planning investment should stress-test their cash flow against Payday Super and tax compliance costs before committing to borrowing. Comparing funding options early can help avoid being forced into costlier credit later.
Further reading
For broader context on how businesses weigh funding options, explore our Investing coverage.
Source note: This article includes information reported by Brokernews.
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