Small business reaping benefits of stronger competition in lending market 

Small businesses are benefiting from more favourable lending conditions thanks to stronger competition, as the full extent of banking support for these businesses is laid out in a new report released today by the Australian Banking Association. 

The ABA’s latest industry report focusing on small and medium businesses finds: 

• strong lending competition means the margin banks charge on small business loans above the cash rate has fallen to a five-year low 
• 40 per cent of small businesses have sought finance from their bank  
• banks are providing record levels of lending, with credit outstanding reaching $750 billion up from $567 billion in 2023 
• new technology and systems have seen one in four small businesses experience faster approval times for credit 

ABA CEO Simon Birmingham said the report highlights the benefits stronger competition is delivering for small business customers.

“We are seeing banks compete hard to win small business customers and that is translating into more competitive pricing for those businesses,” Mr Birmingham said.

“This is competition working exactly the way it should, giving owners more choice about who they bank with and more finance to reinvest into their business.

“Australia’s 2.7 million small and medium businesses are absolutely critical to the economy and banks are providing them with the support they need to operate, to grow and employ more Australians.

“We are seeing record amounts of lending to small businesses with $750 billion in outstanding credit, providing an important injection of financing for working capital, new plant and machinery or opportunities for expansion.

“Banking support also extends beyond finance, with banks providing small business customers with the payment infrastructure they need to operate including important protections to prevent scams and fraud.

“It’s this day-to-day financial infrastructure that allows businesses to operate whether it be transaction accounts, online banking, payments services or cash flow tools.

“Support isn’t just there for the good times. When the going gets tough, banks have dedicated teams to assist small business customers navigate through harder economic conditions.”

Download Banking Australia’s small & medium businesses report here.