As economic uncertainty, inflation pressures, and rising operating costs continue to weigh on SMEs, brokers are playing an increasingly important role in helping business owners access the right funding solutions. We sit down with Guy Callaghan, CEO of Banjo Loans, about the trends emerging from the lender’s latest SME Compass Report, and why understanding a client’s business has never been more critical in today’s fast-moving lending environment.
Q. What are we seeing in the SME market right now?
The sector is really hurting. What you’re seeing – and this came through in the SME Compass Report – is a multifaceted, multispeed economy at the moment. There are different speeds in geographical break-ups and different speeds across industries.
Q. How has this been reflected in business confidence?
We released our sixth edition of the SME Compass Report earlier this year, where we interviewed over 1,100 SME business owners. They are an optimistic bunch. They are a glass three-quarters full bunch, and they do pretty well.
But 83 per cent of businesses now say there have been business issues that are keeping them up at night. Inflation is the number one, followed by cash flow. (In saying that, 69 per cent hit their revenue targets last year, so nearly 70 per cent!)
However, confidence for the next 12 months is down. We’ve gone from a high of 83 per cent of businesses being confident about having a good 12 months ahead, to 71 per cent. That’s a really big drop. And 67 per cent of businesses think inflation is going to be the driver of that.
Now inflation’s going to get even harder given what is happening in the Middle East.
Q. How does this year’s SME Compass Report result compare to previous surveys?
Back in 2022, when we were starting to go through some hard yards, businesses raised their prices with what was happening with inflation, increased supply costs, and increased costs of doing business. But they realised that wasn’t sustainable. So, they started economising across their operations (not hiring, laying people off, etc) and being really tight around what they were doing and the products they’re offering.
This year, for the first time in our research, we’ve seen a spike of businesses raising prices again. Nearly half of businesses surveyed are actually starting to raise their prices again. That’s the flow-on effect of inflation.
So, I really think we’re in for some hard yards ahead for SMEs. It becomes really important for brokers to engage with their clients, the business owners, to actually understand what their needs are and what they need the funding for.
Q. Where do brokers fit in, and how can they support SME?
Brokers are really important to business owners and what they’re trying to achieve. It’s helping with that ease of process, but it’s also really important for the broker to understand the business and why they need funding and then finding the right lender.
Price is the number one consideration – the interest rate that is being charged. However, now we’re seeing a drop-off where they’re wanting to make sure that the loan is fit for purpose.
The other thing to bear in mind with this is that business owners are taking longer to make a decision. We’re seeing this in all of our data. We will conditionally approve a loan, and now they’ll sit on it until they really need the money – like a line of credit or whatever it might be. They know they’re going to need it. For example, the project hasn’t started yet, so they’ll wait until the project actually starts, until they draw it down.
Q. For brokers who haven’t yet written a Banjo loan – what’s your sweet spot?
We’ve been traditionally known for larger deals. We do really well with those deals in the $500,000–$2 million range that are non-property-backed. We’re now also getting more aligned and better at those deals that are less than $500,000 and bank-statement analysis only.
At Banjo, we don’t want to be the biggest or bubbliest lender out there. We want to be the favourite. We want to be Australasia’s favourite non-bank lender. And by that, I mean a broker or a client has a great experience. Every time they use us, they want to come back and use us again.
About 70 per cent of businesses already come back and use us again. We just want to continue on that – it’s something we strive for.
Q. What’s your advice for brokers working with SMEs in the current climate?
It’s going to be a tough six to 12 months ahead. So, get to know your clients, get to know what their fit is, understand the lenders and what they know, and be patient.
Tune in to hear more!
Find out more about how Banjo Loans is helping brokers support SMEs in 2026 in the In Focus podcast episode, ‘The headwinds and opportunities in SME lending’, here:
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