Australian small businesses still have it tough, but brokers play a more important role than ever before
When MPA last checked in on the SME lending scene in May, the narrative was one of unwavering resilience.
Despite soaring input costs and restrictive access to funding via traditional means, Australia’s entrepreneurial small business owners were increasingly forging close broker ties to help devise ways of raising capital.
These battle-hardened SMEs have not exactly enjoyed a massive reprieve in the new financial year. Per Equifax’s Business Credit Demand report for the June 2025 quarter, fewer new businesses entered the market on a year-on-year basis, while insolvencies shot up to a five-year high.
As concerning as that is, overall business credit applications did at least tick 5.2% higher, indicating an appetite for investment in new and ongoing business operations.
Australia’s non-bank lenders have reflected on this ongoing resilience in discussions with MPA.
“SME credit demand in Australia is definitely rising,” says ORDE Financial’s director of distribution Lee Prior, noting that the sector now comprises more than 2.5 million entities, spanning industries from construction and professional services to retail, healthcare and hospitality.
“Many of these businesses are led by self-employed owners who are focused not just on day-to-day operations but also on building personal and business wealth.”
“It’s a space that’s evolving, and there’s room for more brokers to step in and make their mark” – Lee Prior, ORDE Financial
Prior explains that business owners are increasingly looking to refinance, consolidate, expand and invest in property. He is also seeing a strong trend towards property ownership among self-employed borrowers, with many using residential property-backed lending as a practical alternative to unsecured or cash flow loans.
Brokers are naturally tuning into the emerging opportunities in the sector, but “there’s still plenty of untapped potential”, Prior says, adding, “It’s a space that’s evolving, and there’s room for more brokers to step in and make their mark.”
Matthew Heinnen, group manager – commercial at Liberty, calls SME credit demand “resilient, with many small businesses seeking finance amid market uncertainty, supply chain volatility and rising operational costs”.
Small businesses have a growing awareness of the broader range of available lending options on the market, says Heinnen, “particularly through non-bank lenders like Liberty”. He explains how brokers play a central role in developing this awareness by connecting borrowers with alternative funding options to suit their needs.
Lenders get flexible
While traditional banks are eyeing the business lending space with keen interest, their restrictive lending and credit policies often lock borrowers out of the market. This is creating a widening window of opportunity for alternative lenders to step up their game.
Pepper Money’s flexible policies and straightforward approach “are helping brokers say yes to more clients, especially those looking to grow their portfolio or secure premises for their business”, says Barry Saoud, the non-bank lender’s general manager, mortgage and commercial.
At Pepper Money, commercial lending is predominantly built around helping business owners secure property, explains Saoud. “Many SMEs that we’ve helped fall into our prime offering, and these borrowers are typically seeking funding to purchase commercial assets – a clear indication that property acquisition is driving demand,” he says.
“SME lending is helping brokers diversify, deepen relationships and build more resilient pipelines" – Grant Smith, ORDE Financial
However, while property acquisition is the key driver, “we also support self-employed borrowers navigating complex income structures or recovering from past credit issues”, Saoud says, highlighting Pepper Money’s near prime offering and simplified income verification options, which “give brokers the tools to help these clients move forward”.
More than 40% of Pepper Money’s customers last year were self-employed, with around one in three applications using alternative documentation. The lender has responded by simplifying income verification for prime alt doc (i.e. only one document required), increasing loan-to-value ratios, extending loan caps and accepting vacant land as security.
“These changes have helped drive consistent growth in SME lending through brokers,” Saoud says.
ORDE Financial has enjoyed a strong surge in SME deal volume, having grown its borrower base by 35% in the past year.
“All of this momentum is thanks to brokers, many of whom are expanding into commercial and SME lending and increasingly turning to ORDE as a key part of their solution for business customers,” explains Grant Smith, ORDE’s chief lending officer.
ORDE’s flexible product suite, including alt doc, lease doc and full doc, “enables brokers to support a wide range of business needs and borrower profiles”, Smith adds. “SME lending is helping brokers diversify, deepen relationships and build more resilient pipelines. We’re proud to work exclusively with brokers, supporting them as they help even more SMEs and self-employed business owners achieve their goals in the years ahead.”
"Our long-standing commitment to broker relationships positions us as a trusted partner, helping brokers support clients with confidence" – Matthew Heinnen, Liberty
Heinnen says, “Small and medium businesses are looking for funding that reflects their unique circumstances. Brokers value the support Liberty provides in structuring solutions for a variety of clients that have circumstances often seen as being too complex.”
Liberty makes a habit of working closely with accountants to tailor alt-doc solutions to help SMEs, such as by accepting digital bank statements, business activity statements or accountant-prepared summaries to support income verification.
“With nearly 30 years of experience, Liberty understands the intricacies of business financing. Our long-standing commitment to broker relationships positions us as a trusted partner, helping brokers support clients with confidence,” says Heinnen.
Loan volumes reflect broker diversification
According to the MFAA’s 19th Industry Service Intelligence report, the number of mortgage brokers writing commercial loans increased 24.21% year-on-year in the April–September 2024 period. The value of commercial loans settled by mortgage brokers hit a record of nearly $22.7 billion during this period.
The growth in brokers writing commercial loans “reflects industry diversification”, explains Heinnen. “More brokers are expanding beyond home loans to meet broader customer needs, including those of self-employed clients and small business owners who are not the focus of traditional lenders.”
Liberty is supporting this momentum by offering brokers direct access to experienced business development managers and credit assessors. “We expect this trend to continue as brokers deepen client relationships and expand their service offering,” Heinnen says.
Prior adds that “SME lending is becoming a core part of the broker pipeline. More brokers are turning to it because it helps balance out the volatility in the resi market alone, but, more importantly, it opens the door to deeper, longer-term relationships with SME clients.”
Since Prior considers it a smart way to grow a sustainable broking business, he doesn’t see this trend de-escalating any time soon.
“You’re not just writing one-off deals; you’re supporting clients through property purchases, business expansion and refinancing. That means more repeat business, more referrals and more resilience,” he says.
But it’s not just brokers reaping the benefits of changing consumer trends – the data shows that more and more SMEs are approaching non-bank lenders to support new investment.
A hotly competitive market
Of course, ORDE, Liberty and Pepper Money are not the only ones targeting SME lending. In fact, it’s a hotly competitive segment that more and more alternative lenders are piling into. Banking majors, too, are upping the ante on what they can offer SMEs.
For Smith, the key to remaining competitive is providing top-notch support through ORDE’s credit team and business development managers. That way “we get a clear view of what’s happening in the market and what’s showing up in their pipeline. That feedback loop helps us stay responsive and evolve our products in ways that actually support the deals brokers are working on”.
On the policy front, ORDE has increased its commercial cap to $5 million per security in order to service the larger, more complex opportunities that brokers are bringing to the table.
“But it’s not just about product changes,” says Smith. “We’re also really focused on helping brokers grow confidence in this space, whether that’s supporting them through their very first SME or commercial deal, hosting educational webinars where they can build their SME lending skills or helping them navigate more complex scenarios as they build experience.”
“We’re seeing the same shift in commercial lending that’s already reshaped residential. Customers are choosing brokers more than ever" – Barry Saoud, Pepper Money
Prioritising the broker experience is essential to maintaining a competitive advantage. “Liberty continues to back the broker channel, which remains a centre of our business model,” says Heinnen. This includes providing ongoing education, tools and support so more brokers can help businesses put their plans into action.
Saoud adds, “We listen to brokers and build around what they need. Through our Broker Research Hub, we co-design policy enhancements based on real feedback. That means every change we make is grounded in broker experience and pain points. Our commercial lending offering is built to help brokers support their clients’ growth, resilience and long-term success. We know business owners don’t always fit into neat boxes – and neither should their finance options.”
What’s next for SME lending?
SMSF commercial lending is a space to watch, according to Smith. “More self-employed clients are using their funds to buy business premises, and brokers are helping them structure those deals in smarter ways.”
Commercial property purchases remain a big part of the mix, particularly for clients looking for stability and long-term value, while Smith is also seeing more demand for short-term interest-only funding.
Appetite for retained stock lending is also increasing, particularly among developers who want to hold assets post-construction and free up capital for the next stage.
Source: Equifax’s Business Credit Demand report, June 2025 quarter
Reflecting on the bullish MFAA commercial broking data, Saoud says, “We’re seeing the same shift in commercial lending that’s already reshaped residential. Customers are choosing brokers more than ever.
“That momentum is real, and it’s growing. We believe it’ll continue. SMEs are leaning on brokers to navigate complex funding needs in a changing cost environment.
“For brokers, it’s a chance to step up, build capability and unlock new income streams,” Saoud points out. “If you’re already working with small business owners, there’s huge potential to expand your offering. So don’t be afraid to get into it. There’s opportunity here, and it’s worth exploring.”
Heinnen expects technology to continue reshaping SME lending, with automation, digital platforms and data insights driving faster, more accurate outcomes.
But “just as important is the human element”, he stresses. “Our experienced sales team continues to support brokers with insights and guidance to navigate complex scenarios and deliver flexible solutions.”
