Softening optimism, thin cash buffers, and looming rule changes are reshaping the risk profile of Australia’s SMEs.
Australian small and medium-sized businesses (SMEs) are heading into the new financial year with softer confidence and tighter cash flow, according to new research from small business lender Prospa and pollster YouGov.
The latest Prospa SME Sentiment Report, based on a national survey conducted in May 2026, shows that a clear majority of business owners still expect to remain in the black – but with far less conviction than earlier in the year.
A total of 60 per cent of SMEs now say they are confident they can remain cash flow-positive over the next 12 months, down from 70 per cent in February.
Nearly one in two (46 per cent) SMEs reported lifting prices in the past three months to offset higher input costs and inflation.
Cash buffers also remain slim in many firms, with close to one in five (18 per cent) saying they had no cash reserves whatsoever.
Roberto Sanz, Prospa’s general manager, sales and partnerships, said the data highlighted a growing appetite for outside finance and a reluctance among the smallest operators to seek help.
“Three in 10 SMEs expect to access external funding over the next 12 months, and the average amount sits around $23,000,” he said.
“What’s interesting is the gap between sole traders and larger SMEs. Sole traders are less likely to seek funding, but they’re also the ones with the thinnest buffers.
“There’s an education opportunity there for brokers, helping those smaller operators understand that accessing the right funding at the right time is about protecting cash flow, not just filling a gap.”
Payday Super awareness improves, yet readiness slips
A central focus of the research is the shift to Payday Super, which will require employers to pay superannuation at the same time as wages from July 2026.
Back in February, Prospa’s polling found that 41 per cent of SMEs did not fully understand the change, including 30 per cent who had not heard of it at all.
The latest results show that a quarter of SMEs (25 per cent) remain unaware of Payday Super, with a further 11 per cent stating they still do not fully grasp the reform.
Yet the survey found that preparedness has edged backwards.
In February, 19 per cent of respondents said they were not prepared, and 14 per cent were unsure, but in the May survey, the “not prepared” share climbed to 23 per cent, while the “unsure” cohort remained at 14 per cent.
That uncertainty is already spilling over into investment decisions, with 19 per cent of SMEs saying they had delayed or scaled back planned investments due to Payday Super.
Sanz stressed both the scale of the change and the opportunity for brokers to step in before problems crystallise.
“Payday Super is one of the biggest compliance shifts for SMEs in years, and the data shows a lot of businesses still aren’t ready,” he said.
“That’s a cash flow planning conversation brokers should be leading right now. The ones who get in front of it will strengthen those client relationships heading into the new financial year.”
AI tools spread, but smallest firms lag
The SME Sentiment Report also explored how small businesses are using technology to manage these overlapping pressures.
Just under half of all SMEs (49 per cent) said they had implemented or used some form of artificial intelligence in the past six months to streamline administration or forecast cash flow gaps, with AI‑powered assistants the most common application at 34 per cent.
However, the survey revealed a widening divide between the smallest operators and more established businesses in regard to technology uptake.
Sole traders are significantly less likely to be using AI tools, with only 40 per cent reporting some level of adoption compared with 62 per cent among non‑sole traders.
Drawing these threads together, Sanz said the technology findings revealed a shift in expectations about what good external support looked like.
“Half of all SMEs are now using AI tools to manage admin or forecast cash flow. That tells you these businesses are looking for smarter ways to operate,” Sanz said.
“Brokers who understand that shift and position themselves as strategic partners, not just transaction facilitators, are the ones who will win in this environment.”
[Related: 1 in 3 SMEs using non-banks for lending needs]
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