Financing SMEs and Entrepreneurs 2026: Australia
Table of contents
According to the Australian Bureau of Statistics (ABS), there were 2 657 809 SMEs in Australia in 2023‑24. SMEs accounted for 99.8% of all enterprises in Australia and employed more than 8.5 million people in 2023-24, which equates to around 64.7% of employment in the private sector.
The Australian economy is emerging from a period of high inflation and is gradually gaining momentum. Headline inflation has moderated significantly from its peak. The unemployment rate remains low and wages growth is forecast to remain above the pre-pandemic average rate. Real GDP grew by 1.4% in 2024-25 and according to economic forecasts produced by the Australian Department of the Treasury, reported in the 2025-26 Budget in March 2025, is expected to strengthen to 2¼% in 2025–26.
Interest rates for both SMEs and large businesses remain above pre-pandemic levels. Interest rates on outstanding SME loans in Australia increased slightly from 6.5% in 2023 to 6.6% in 2024, while interest rates on new loans stayed steady at 6.5% in 2023 and 2024. The interest rate spread between SME loans and large enterprise loans widened slightly in 2024 relative to 2023 but remained narrow at 76 basis points in 2024. In the decade prior to 2022, the spread typically ranged between 160 and 190 basis points. In the first half of 2025, interest rates on SME and large business loans declined alongside declines in the cash rate and bank bill swap rates.
New lending to SMEs increased from AUD 122.5 billion in 2023 to AUD 153.7 billion in 2024.1 In 2024, the share of SME outstanding loans stood at 52.7% of total outstanding business loans.
The total amount of venture capital invested by registered Early-Stage Venture Capital Limited Partnerships (ESVCLPs) and Venture Capital Limited Partnerships (VCLPs) decreased in 2022 by 14.27%, totalling AUD 1.83 billion, increasing in 2023 by 7.33% to AUD 1.96 billion, before rising to a record high of AUD 2.2 billion in 2024, an increase of 12.18%.
Leasing and hire purchase volumes increased by 6.7% through the year to AUD 13.1 billion in 2024. This compares to an increase of 25.9% in 2023 and a decrease of 5.4% in 2022.
There are two types of business insolvencies in Australia, corporate insolvencies and unincorporated insolvencies. The number of unincorporated insolvencies per 10 000 businesses increased from 19 in 2023 to 22 in 2024. The number of corporate insolvencies per 10 000 registered companies increased to 40 in December 2024 from historically low levels during the pandemic (which stood at around 15 on average between April 2020 and June 2022). This increase reflects a catch-up effect following suppressed insolvency activity during the pandemic and more challenging trading and economic conditions. Additionally, 18% of corporate insolvencies in 2024 were small business restructuring (SBR) appointments.
The SBR process is a simplified debt restructuring process designed to help eligible small businesses to successfully restructure its debts and remain in business. This process became available for eligible companies from 1 January 2021 and is one of the insolvency reforms, initially implemented to manage the potential impacts for firms from the pandemic and now permanently available. In its review of the SBR process for the period from July 2022 to December 2024, the Australian Securities and Investments Commission (ASIC) observed that the large majority of companies that completed an SBR plan remain registered (Australian Securities and Investments Commission, 2025).
The Australian Government has a comprehensive SME agenda aimed at making it easier for small businesses to do business, innovate, thrive and continue contributing to the Australian economy and communities. Its policies to promote SMEs focus on easing the pressure on small businesses, supporting small businesses to grow, and levelling the playing field for small businesses. Government policies on finance, taxation, competition and productivity aim to increase long-term opportunities for SMEs.
Notes: The SME definition was revised in 2023 and 2024 so caution is necessary when conducting any comparison across time. Venture capital data corresponds to calendar years. Venture capital data in previous Scoreboards used Australian financial years and is now updated to ensure consistent timeframes.
Source: See Table 4.
Inflation has moderated significantly from its peak in both headline and underlying terms, while the unemployment rate has remained low. Growth in the Australian economy is expected to gradually pick up over 2025–26.
Note: Calculated as a share of nominal GDP
Source: ABS cat. no. 5204.0 and the Treasury, Australian Government.
According to the Australian Bureau of Statistics (ABS), there were 2 657 809 small and medium sized enterprises (SMEs) in Australia in 2023-24, accounting for 99.8% of all businesses. Most Australian businesses are non-employing (62.5% of all businesses, or 1 663 837). Of those businesses that were employing, 69.4% (or 693 558) employed between 1 and 4 people, whilst 0.2% (5 189) of all businesses employed more than 200 people (Table 3).
In 2023-24, SMEs employed more than 8.5 million people, which equates to around 64.7% of employment in the private sector. SMEs contributed AUD 1 012 billion to the Australian economy or 55.2% of total private sector output.
Note: Data excludes public sector enterprises. As of 2023-24, data excludes superannuation funds.
New lending to SMEs increased from AUD 122.5 billion in 2023 to AUD 153.7 billion in 2024. In 2024, the share of SME outstanding loans stood at 52.7% of total outstanding business loans, little changed from its share in 2023 22 . The Reserve Bank of Australia (RBA) has noted that business credit growth has generally been strong. Medium-sized business loans were the driver of growth in lending to SMEs in 2024. However, the RBA’s liaison program and available data suggest that Australian SMEs find it challenging to access finance through the banking system with terms that suit their needs. Smaller businesses have frequently cited high interest rates, strict lending criteria, and the requirement to provide personal assets or property as collateral, as key challenges to accessing finance (Reserve Bank of Australia, 2024).
Total business credit grew by 10% in the twelve months to December 2024. Growth in business credit was broad-based across industries. Businesses’ capacity to borrow has been supported by relatively low levels of leverage and above average cash balances (Reserve Bank of Australia, 2024) .
Borrowing rates increased slightly for SMEs in 2024. Outstanding SME loan interest rates in Australia increased slightly from 6.5% in 2023 to 6.6% in 2024, while interest rates on new loans stayed steady at 6.5% in 2023 and 2024. Interest rates for larger businesses were broadly unchanged over this period. The interest rate spread between SME loans and large enterprise loans widened slightly in 2024 to 76 basis points. However, the spread remains narrow relative to recent history; in the decade prior to 2022, the spread typically ranged between 160 and 190 basis points. In the first half of 2025, interest rates on SME and large business loans declined alongside declines in the cash rate and bank bill swap rates.
Around half of small business loans are residentially secured (Reserve Bank of Australia, 2024). While interest rates on loans secured by residential property are typically lower than interest rates on unsecured loans, small business owners may be concerned about borrowing against the family home.
The total amount of venture capital invested by registered Early-Stage Venture Capital Limited Partnerships (ESVCLPs) and Venture Capital Limited Partnerships (VCLPs) decreased in 2022 by 14.27%, totalling AUD 1.83 billion, increasing in 2023 by 7.34% to AUD 1.96 billion, before rising to a high of AUD 2.2 billion in 2024, an increase of 12.18%.
Leasing and hire purchase volumes increased by 6.7% through the year to AUD 13.1 billion in 2024, this compares to a year on year increase of 25.9% in 2023 and a year on year decrease of 5.4% in 2022.
At the same time, innovative models of non-bank finance are increasingly reaching SME clients. SME lending remains challenging due to the greater difficulty in assessing credit worthiness of small businesses. At the same time new SME lending opportunities have been created by others including non‑banks through data availability and technology. According to the Productivity Commission (2021), combining new data sources with innovative analytical tools (such as artificial intelligence and machine learning) has given many lenders the information and confidence to lend to SMEs without the security of property.
There are two types of business insolvencies reported in Australia, corporate insolvencies and unincorporated insolvencies.
The number of unincorporated insolvencies per 10 000 businesses increased from 19 in 2023 to 22 in 2024. The number of corporate insolvencies per 10 000 registered companies increased to 40 in December 2024 from historically low levels during the pandemic (which stood at around 15 on average between April 2020 and June 2022). This increase reflects a catch-up effect following suppressed insolvency activity during the pandemic and more challenging trading and economic conditions. Additionally, 18% of corporate insolvencies in 2024 were small business restructuring (SBR) appointments.
The SBR process is a simplified debt restructuring process designed to help eligible small businesses to successfully restructure its debts and remain in business. This process became available for eligible companies from 1 January 2021 and is one of the insolvency reforms, initially implemented to manage the potential impacts for firms from the pandemic and now permanently available. In its review of the SBR process for the period from July 2022 to December 2024, the Australian Securities and Investments Commission (ASIC) observed that the large majority of companies that completed an SBR plan remain registered (Australian Securities and Investments Commission, 2025) (Australian Securities and Investments Commission, 2025).
Non-performing loans as a percentage of total outstanding business loans slightly increased from 1.2% in 2023 to 1.4% in 2024.
The Australian Government has a comprehensive SME agenda aimed at making it easier for small firms to do business, innovate, thrive and continue contributing to the Australian economy and communities. Its policies to promote SMEs focus on easing pressure by increasing business capability and resilience, levelling the playing field between large and small businesses to encourage fairness and competition, and supporting small businesses to grow (The Treasury, 2025). Government policies on finance, taxation, competition and productivity aim to increase long-term opportunities for SMEs.
The challenge of obtaining finance on terms that suit SMEs’ needs has been a consistent theme of the RBA’s Small Business Finance Advisory Panel. Challenges faced by small businesses when borrowing include access to finance for start-ups, the heavy reliance on secured lending, the role of housing collateral and personal guarantees in lending, and administrative burdens in the loan application process.
The Australian Government’s recent reforms (discussed below) aim to improve access to finance, including by lowering capital requirements for small business lending.
From 1 January 2023, the Australian Prudential Regulation Authority (APRA) introduced its Unquestionably Strong Framework for Bank Capital to strengthen the resilience of the Australia financial system. In the design of the new framework, APRA has sought to improve the sensitivity of capital requirements to the level of risk, including by reducing capital requirements to support small business lending.
A strong financial system that facilitates the flow of savings to efficient investment opportunities assists SMEs to invest in new technologies, fund innovative practices and expand. Government authorities regularly monitor developments in SMEs’ access to finance.
The RBA annually hosts a Small Business Finance Advisory Panel, while both the RBA and the Australian Treasury regularly speak with Australian banks, non-bank lenders and businesses about business financing conditions, as well as the broader economic environment for businesses.
APRA's liaison with banks and other market participants also considers access to finance for SME borrowers as well as the performance of SME loans more generally. APRA is also monitoring the increased digitisation of credit assessment for smaller SME borrowers.
The global economy provides Australian SMEs with an opportunity to access new markets and the Government is committed to helping SMEs reach their export potential. The Export Market Development Grants (EMDG) program provides targeted financial assistance to help small to medium businesses market and promote their goods and services internationally.
Export Financing Australia (EFA) is Australia’s export credit agency. EFA provides commercial finance for export trade and overseas infrastructure development. From small and medium-sized enterprises to large corporates, foreign governments and infrastructure projects, it helps Australian businesses take on the world. In doing so, EFA’s finance supports Australia’s economic security and regional resilience. Export Finance Australia has a range of loan, bonds and guarantee solutions and a dedicated team of SME experts located across Australia. In 2023-24, Export Finance Australia provided AUD 421 million to SMEs. To enhance the availability of export finance, Export Finance Australia has signed several risk participation agreements (RPAs) with major banks to support their SME customers exporting around the world. In 2023‑24, these RPAs enabled SME support with more than AUD 158 million.
The Australian Government administers four measures aimed at improving payment times to small businesses:
The Payment Times Reporting Scheme is a key initiative to improve the payment times of large businesses to their small business suppliers through creating transparency around payment performance. Large businesses report on their payment times and terms to small business suppliers every six months, with reports published on the Payment Times Reports Register.
The Government agreed to the recommendations of the independent Statutory Review of the Payment Times Reporting Act 2020 in December 2023. Major reforms to overhaul the Scheme took effect on 7 September 2024, increasing the transparency of poor payment practices by large businesses and highlighting exemplars to encourage faster and fairer payment practices, expanding the Regulator’s compliance tools and streamlining reporting for better and more useful data.
The Payment Times Procurement Connected Policy uses government agency procurement to improve payment times to suppliers, including small businesses in the supply chains of government contracts valued over AUD4 million.
The Supplier Pay On-Time or Pay Interest Policy requires government agencies to pay invoices to their suppliers (regardless of contract value) within a maximum of 20 calendar days (5 calendar days for eInvoices) or pay interest on late payments.
The Commonwealth Supplier Code of Conduct applies to all Commonwealth procurement contracts from 1 July 2024. It sets out the minimum expectations of suppliers while under contract with the Commonwealth, including that suppliers should reflect the maximum payment times set out in the Supplier Pay On-Time or Pay Interest Policy in their contracts with their subcontractors.
Through the Research and Development Tax Incentive, SMEs with annual turnover below AUD 20 million have access to a refundable tax offset on eligible R&D expenditure. In 2022-23 this provided an estimated AUD 2.5 billion in assistance to SMEs according to the Productivity Commission's (2023) Trade and Assistance review.
The Australian Government also established the Industry Growth Program from 2023-24. The program supports SMEs and startups undertaking innovative commercialisation and/or growth projects through the provision of tailored advice, matched grant funding and increased exposure to industry partner organisations. The program is targeted to ventures within the priority areas of the Australian Government’s National Reconstruction Fund (NRF) to help build Australia’s manufacturing capability for the future.
The Australian Government has committed to a suite of tax measures to lower the tax-related administrative burden for small businesses. These include:
Expanding the number of tax clinics nationwide from 1 January 2025 and opening grant funding to Technical and Further Education providers to assist small businesses and individuals (sole traders) who do not currently receive professional tax assistance.
Reducing single touch payroll red tape. From 11 December 2024, employers are able to provide a single touch payroll (STP) engagement authority to their tax agents for extended periods, reducing the amount of paperwork for STP lodgements.
Expanding access to Australian Taxation Office (ATO) audit reviews to reduce tax disputes for small businesses. From 1 July 2024, the ATO began trialling an expansion of their independent review process to include small businesses with aggregated annual turnover between AUD 10 million and AUD 50 million who are subject to an ATO audit. This can achieve better outcomes for taxpayers by delivering quicker and cheaper resolution of disputes.
Reducing the ATO’s use of cheques. From 1 January 2025, the ATO began reducing the use of cheques for income tax refunds by encouraging greater use of electronic funds transfers to bank accounts, assisting in time and cost savings to taxpayers.
Simplifying late amendments to tax returns for small businesses. From 1 January 2025, the time small businesses have to make amendments to their income tax returns was extended from 2 to 4 years, which should reduce processing times and paperwork for the majority of late amendments
In addition to direct SME financing programs, the Australian Government is delivering a broad range of initiatives to improve the operating environment for SMEs. This includes:
Extending the Energy Bill Relief Fund, introduced in 2023-24 which provides electricity bill relief to eligible small businesses and households, to 31 December 2025. Approximately one million small businesses will receive support through this fund.
Improving cashflow and reducing compliance costs for small businesses by extending the AUD 20 000 instant asset write-off. The AUD 20 000 instant asset write-off threshold, introduced in 2023-24, allows small businesses with an annual turnover of less than $10 million to immediately deduct eligible assets each costing less than AUD 20 000. It has been extended until 30 June 2025. A further extension until 30 June 2026 is subject to the passage of legislation.
Extending the Small Business Debt Helpline and the NewAccess for Small Business Owners programs to provide free financial counselling and mental health coaching.
Investing more than AUD 60 million to help small businesses adopt and harness digital opportunities while being cyber secure, through the Digital Solutions program, Cyber Wardens program, Small Business Cyber Resilience Service and Cyber Health Check.
The National Skills Agreement is a joint agreement between the Commonwealth, states and territories to strengthen the vocational education and training (VET) sector to deliver quality education and training. Through the Fee-Free Technical and Further Education (TAFE) Skills Agreement, Commonwealth and State and Territory funding has been provided for 500 000 Fee-Free TAFE and VET places across Australia over 2023 to 2026.The Government has also legislated to fund 100 000 places each year from 2027.
Note: Data from 2019 onwards in the indicators of outstanding stock of loans and new lending are collected using a revised SME definition, so caution is necessary when conducting any comparison across time.
Panel F. refers to bankruptcies but is using data for all insolvencies, of which bankruptcies are a subset (see Table 4. Sources and definitions)
Source: See Table 1
References
Australian Bureau of Statistics. (2024). Counts of Australian Businesses, including Entries and Exits, July 2020 - June 2024. https://www.abs.gov.au/statistics/economy/business-indicators/counts-australian-businesses-including-entries-and-exits/jul2020-jun2024
Australian Securities and Investments Commission. (2025). Review of Small Business Restructuring: 2022-2024. https://download.asic.gov.au/media/b2ofqop2/rep810-published-27-june-2025.pdf
Reserve Bank of Australia. (2024). Box A: The Pick-up in Housing and Business Credit Growth, Statement on Monetary Policy – November 2024. https://www.rba.gov.au/publications/smp/2024/nov/box-a-the-pick-up-in-housing-and-business-credit-growth.html
Reserve Bank of Australia. (2024). Small Business Economic and Financial Conditions. https://www.rba.gov.au/publications/bulletin/2024/oct/pdf/small-business-economic-and-financial-conditions.pdf
The Treasury. (2025). National Small Business Strategy. https://treasury.gov.au/sites/default/files/2025-02/p2025-624843-s.pdf
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Please cite this publication as: OECD (2026), Financing SMEs and Entrepreneurs 2026: An OECD Scoreboard, OECD Publishing, Paris, https://doi.org/10.1787/075d8058-en.
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← 1. Definitions of SME lending changed in April 2023 resulting in a slightly higher share of loans being classified as SME loans. From 2019 to April 2023, businesses with turnover of less than AUD 50 million were considered as SMEs. From April 2023 to May 2024, for internal ratings-based lenders, businesses with turnover of less than AUD 75 million were considered as SME. For other lenders, and SME was still a business with less than AUD 50 million in turnover.
← 2. 2 Definitions of SME lending changed in April 2023 resulting in a slightly higher share of loans being classified as SME loans. From 2019 to April 2023, businesses with turnover of less than AUD 50 million were considered as SMEs. From April 2023 to May 2024, for internal ratings-based lenders, businesses with turnover of less than AUD 75 million were considered as SME. For other lenders, and SME was still a business with less than AUD 50 million in turnover.