Australian small and medium-sized businesses are making more enquiries about business finance as weakening confidence begins to translate into cash flow pressure.
Commercial finance broker Murray Mayes, director of Premium Finance Group Australia, said the change had become noticeable only in the past few weeks and was showing up in the types of enquiries his business was receiving, rather than in historical financial data, which typically lags real-time conditions.
Key Takeaways
- Proactive Buffer Building: Local business owners are increasingly seeking overdrafts, invoice financing, and trade facilities to cushion against slowing demand rather than to fund expansion.
- Declining Sentiment: Persistent weakness in consumer sentiment and negative business confidence (-5 in the NAB survey) are directly impacting commercial cash flow across trade, hospitality, and retail sectors.
- Rising ATO Debt: Formal ATO payment arrangements are climbing sharply, with small businesses accounting for $35.9 billion in collectable tax debt nationwide.
- Stable Credit Access: Liquidity remains available as lenders continue writing quality loans, making early cash flow management a strategic advantage rather than a crisis response.
“We’re seeing more businesses looking for working capital facilities such as overdrafts, trade finance and invoice financing to bridge short-term cash flow gaps,” Mr Mayes said.
His observations align with the latest NAB Monthly Business Survey, which found business confidence remained negative at -5 in June, while business conditions remained below their long-run average and profitability was subdued. The report noted that business activity had slowed through the first half of 2026 despite some improvement in confidence from earlier lows.
At the same time, the latest Westpac–Melbourne Institute Consumer Sentiment Index found consumer sentiment in July 2026 remained among the weakest recorded in the survey’s 50-year history, with households continuing to report pressure on family finances and reluctance to make major purchases.
Mr Mayes said those broader economic indicators were now beginning to show up in conversations with clients. “Whenever confidence falls, businesses tend to delay investment, consumers become more cautious and eventually that starts affecting cash flow,” he said.
“We’re seeing business owners who would normally be talking about expansion instead asking what funding they should have in place if trading conditions become more difficult.”
One recent client, a trade business with annual revenue of around $4.5 million, approached Mr Mayes after experiencing a slowdown in demand. Rather than seeking finance to fund growth, the business wanted to establish a working capital facility that could act as a financial buffer if conditions deteriorated further.
Another client, a hospitality business turning over approximately $5.5 million a year, recently secured additional working capital after noticing fewer customers were dining out than earlier in the year.
Mr Mayes said enquiries relating to Australian Taxation Office (ATO) payment arrangements were also becoming more common, consistent with a broader increase in tax debt among Australian businesses.
“We’re having more conversations with business owners looking for short-term working capital or who have entered ATO payment plans when they ordinarily wouldn’t have needed to,” he said.
A recent Australian National Audit Office report found small businesses account for $35.9 billion of Australia’s $54.2 billion in collectable tax debt. It found around 1.3 million small businesses collectively owed the ATO an average of $26,797 each after small business collectable debt increased 118% between 2018-19 and 2024-25.
“One conversation doesn’t tell you much. But when you start seeing the same types of enquiries across different industries, it suggests businesses are becoming much more cautious about preserving cash.”
Mr Mayes said the trend appeared to be driven by a combination of softer demand, economic uncertainty and recent policy changes that were weighing on business confidence, rather than businesses suddenly losing access to finance.
Despite the increase in enquiries, Mr Mayes said lenders had not materially tightened working capital lending.
“Many lenders are still actively looking to write quality business,” he said. “This isn’t a credit crunch. Businesses can still access finance. What’s changed is that more owners want appropriate funding in place before they actually need it.”
“It’s still early, so we’re not drawing long-term conclusions. But confidence has clearly softened, and that’s changing the way business owners are thinking. Instead of asking how they can grow, more are asking how they can make sure they have enough liquidity if conditions become tougher.”
