Overall Business Credit Demand (Q1 2026 vs Q1 2025):

 - Overall business credit demand: flattened at -0.4% 

 - Business loan demand: flattened at +0.8% 

 - Trade credit demand: decreased by -11.9% 

 - Asset Finance demand: up by +3.1% 

 - SME credit demand: decreased by -7%

 - High-Risk SME Credit Shopping: Activity is 2.9x higher than low-risk counterparts

 - ATO Tax Debt Disclosures: Spiked by +49% in the construction sector  

 

The latest Equifax Business Market Pulse for Q1 2026 reveals signs that Australian businesses have been responding to an everchanging environment, encompassing rate rises and rising energy and fuel costs.  
 
Australia credit demand may have reached a point of surface-level stability in the first quarter of 2026, with a marginal -0.4% decrease YoY. However, this stability differs from the second half of last year where credit was expanding, notably across business loans. Below the surface, Equifax data reveals nuanced differences in how businesses are navigating current economic pressures.

“The Equifax Business Market Pulse for Q1 2026 shows growth in business loans and trade credit running below trend. More positively, asset finance has retained some resilience. This resilience is especially important given that business investment spending is a key component underpinning many economic growth forecasts. Some industries are reporting rising trade payment days and rising tax debt. A gap has also emerged between larger companies compared to Small & Medium sized Enterprises (SMEs),” observed Brad Walters, General Manager, Commercial at Equifax.

In particular, a behavioural gap has emerged in the search for credit, with high-risk SMEs now credit shopping - making multiple enquiries to different lenders within a 30-day period - at a rate 2.9 times higher than their low-risk counterparts. 

This surge in activity among sub-prime borrowers comes as overall SME demand contracted by -7.0% YoY in Q1 2026, as this cohort of borrowers scaled back on enquiries in response to interest rate increases and inflation impacts. Coupled with this are also some signs of a tightening in lending conditions, with some firms reporting that finance became more difficult to obtain over the quarter*.

The Equifax Business Market Pulse shows that while credit shopping among low and medium-risk segments has shrunk, activity among high-risk SMEs (scores of 301-600) surged to 33% in Q1 2026, compared to just 7% for low-risk entities. 



 
Brad Walters, General Manager, Commercial at Equifax, said "What we are seeing today is the culmination of a trend that has been building over the past few months, and is now at its highest levels in the last eight months.” 

“We are seeing a divergence in how Australian businesses are approaching the credit market. For the majority of stable, low-risk entities, there is a sense of 'rate resignation' - they are opting for the speed and certainty of known lending relationships. In contrast, high-risk SMEs seem to be in a state of accelerated credit shopping, having to cast a much wider approval net, often applying to four or five lenders to find an approval.”  
 
“This surge then appears to be further amplified by shifts in market conditions such as rising fuel costs, inflation and interest rates." 

While there has been an elevation in credit shopping behaviours across sub-prime applicants, the relative proportion of higher-risk applicants remains similar to previous periods. However, the Equifax Business Market Pulse identified a slight improvement in the credit quality of higher-scoring applicants, which is supporting a small increase in the average credit quality across the entire applicant pool.

Building on the three-year highs established in late 2025, average business loan credit scores rose by 4 points YoY, reaching the highest levels seen in early two years.
 

“The fact that average scores are still exhibiting relatively sound levels of credit quality on average, may partly reflect a narrowed field of applicants, but it also indicates that well-managed businesses are successfully adjusting to a 'new normal',” Walters added. 

The construction and logistics sectors both continue to demonstrate signs of pressure amid market conditions. 

"As observers of the credit market, we see rising tax debts as one of the key indicators of cash flow dynamics," concluded Walters. 

"While large businesses in logistics and construction are using trade credit to maintain momentum, it seems many smaller players are avoiding new debt entirely, with new company formations in construction falling 53% YoY this quarter as the sector enters a period of consolidation." 

 
* NAB Business Survey, Feb-2026. 

Chart 1: High-Risk SMEs Dominate Credit Shopping Activity (2023-2026)




Chart 2 and 3: Overall Business Credit Demand and SME Credit Demand