Business Borrowing Keeps Climbing as Rates Stay High

Business credit rose by 0.7 per cent in April and 9.6 per cent over the year, outpacing housing credit, personal credit and total credit growth. For SMEs, this suggests many operators are still borrowing for stock, equipment, working capital, expansion or resilience, despite tighter repayment conditions. It also reflects the reality that growth often requires funding before revenue catches up.

Personal credit told a more cautious story. It increased by just 0.1 per cent over the month, although it was still 4.3 per cent higher across the year. That slower monthly pace may indicate households are becoming more careful about discretionary borrowing, debt consolidation and large purchases. With cost-of-living pressure still a concern, borrowers need to be clear about whether a loan is solving a short-term cash flow gap or adding longer-term strain.

The interest rate backdrop remains important. RBA lending rate data for April showed new small business loans averaging above seven per cent, while medium and large business borrowers generally accessed lower rates. That gap matters. Smaller firms often have fewer security options, less pricing power and more variable cash flow, which can make lender choice and loan structure just as important as the headline rate.

For borrowers, the message is not to avoid finance, but to approach it with discipline. Before applying, businesses should update cash flow forecasts, check tax and BAS obligations, separate growth funding from emergency funding, and understand whether secured, unsecured, equipment or line-of-credit finance best fits the need. Households considering personal loans should compare total repayment costs, fees and early payout rules, not only the advertised rate.

This is where preparation can improve confidence. Borrowers who compare finance options across multiple lenders are better placed to identify suitable terms, while those who model repayments before applying can stress-test affordability if income dips or costs rise.

The April figures suggest demand for credit remains resilient, but resilience should not be confused with unlimited borrowing capacity. In 2026, the strongest applications will likely be those backed by clear purpose, realistic repayment plans and a willingness to review the market before signing.