Subprime SMEs Escalate Credit Shopping Efforts

According to Equifax's latest Business Market Pulse for Q1 2026, overall business credit demand edged down by 0.4% year-on-year. However, high-risk SMEs are making multiple credit inquiries at a rate 2.9 times higher than their low-risk counterparts. This trend suggests that subprime businesses are facing greater challenges in securing financing and are therefore broadening their search to multiple lenders.

Equifax's commercial general manager, Brad Walters, noted that this pattern has been building over several months and is now at its highest level in the last eight months. He highlighted a divergence in how Australian businesses are approaching the credit market, with low-risk firms maintaining existing banking relationships while higher-risk SMEs are casting a wider net.

In the construction sector, non-company insolvencies rose by 16% year-on-year in Q1 2026, and new Australian Taxation Office (ATO) tax debt disclosures jumped by 49%. These figures indicate mounting cash flow strain among smaller operators, who may be prioritizing operating expenses over tax obligations.

For SMEs, this environment underscores the importance of maintaining strong financial health and exploring diverse financing options. Engaging with financial advisors and leveraging resources like business loan comparison tools can help SMEs navigate these challenges and identify suitable financing solutions.