The challenges Australia’s small and medium-sized enterprises (SMEs) have faced in recent years read a little like a list of everything you don’t want to happen if you’re trying to run a profitable business.
After surviving the COVID-19 pandemic, many SMEs were hit hard by the cost-of-living crisis, marked by soaring input costs and softer consumer demand.
Inflation and interest rate pressures compounded the strain, with SMEs – like households – absorbing 13 consecutive rate hikes between May 2022 and November 2023.
More recently, new regulatory requirements, including increases to the minimum wage and superannuation guarantee, have added further pressure. As has the fact that the Tax Office is now aggressively chasing old debts.
Against this backdrop, it’s little surprise these businesses are turning to brokers to help them find funding solutions that are fast, flexible, and better tailored to their needs – solutions where non-bank lenders excel.
Commercially minded
SMEs are increasingly turning their backs on traditional banks, with a whopping 55 per cent now planning to fund new investments through non-bank lenders. This marks a record high and a dramatic surge from just 7 per cent in 2014, according to ScotPac’s latest biannual SME Growth Index Report.
The report highlights a significant 7 per cent year-on-year increase in demand for non-bank lending to fuel new SME investment in the first half of 2025.
Conversely, the appeal of bank lenders has sharply declined, with only 30 per cent of SMEs intending to use them – a stark drop from 42 per cent just 12 months prior. Of those still considering banks, 21 per cent will stick with their main relationship bank, while a mere 9 per cent will explore secondary banking options.
SMEs have more choice than ever when it comes to finance solutions, and they’re clearly voting with their feet. That scenario is creating more opportunities for brokers who are uniquely placed to add value by identifying the right solution for each SME’s needs”
- Jon Sutton, CEO, ScotPac
So, what’s driving this seismic shift? SME owners and operators are prioritising faster approvals, more flexible lending criteria, and a wider array of tailored funding options – areas where non-bank lenders are clearly outshining their traditional counterparts.
ScotPac CEO Jon Sutton emphasises the immense opportunity this presents for brokers: “SMEs have more choice than ever when it comes to finance solutions, and they’re clearly voting with their feet.
“That scenario is creating more opportunities for brokers who are uniquely placed to add value by identifying the right solution for each SME’s needs.”
Difference makers
One area where the non-banks excel is the ability to deliver fast solutions.
Nine non-bank lenders achieved an average turnaround time of three days or fewer in the June 2025 Broker Pulse: Commercial Lending Report.
The survey, conducted by Agile Market Intelligence between 1 and 20 July 2025 with 182 brokers (121 of whom had recently written a commercial loan), also revealed 10 non-bank lenders had received a Net Promoter Score (NPS) of +30 or higher from brokers.
Tim Lemon, national sales manager at non- bank lender MA Money, also notes the benefits of not being restricted by the rigid policies that often come with traditional lenders.
“They can offer solutions for customers that are short-term self-employed, credit impaired, or can’t provide full financials – common scenarios in the SME space,” he says.
“Non-banks also allow borrowers to release equity from their property for business use, something banks often make difficult. Their flexibility gives business owners options when they’re growing, rebuilding, or just need cash flow support.”
Craig Stuart, national commercial BDM for self-employed lending specialist RedZed, also says the SME market has been an opportunity to help borrowers who can’t find solutions with the majors.
“We’ve hit that market really hard. We’ve been able to build a product that makes sense for that particular market as well,” Stuart says.
“The major banks put those self-employed clients through so many hurdles, whether it be income verification, looking at historical data from two, three years ago, or just being inflexible around loan purposes, whether it’s cash out for their business or a tax debt. We’re just really open minded to being a lot more flexible around the things that self-employed people need.”
The broker opportunity
The growing emergence of non-bank lenders in this space comes at a time when brokers appear increasingly eager to explore opportunities in commercial lending.
In the six months to September 2024, the number of mortgage brokers also writing commercial loans rose 24.21 per cent year on year (total of 7,023 brokers), according to the Mortgage and Finance Association of Australia’s (MFAA) most recent Industry Intelligence Service (IIS) report.
During this period, MFAA data also showed 31.54 per cent of mortgage brokers were writing commercial loans, up from 30.66 per cent in the six months to March 2024.
So how can brokers, particularly those who don’t already have a Rolodex full of SME clients, make the most of the non-bank lending opportunity?
Belinda Wright, general manager of partnerships and distributions at non-bank lender Thinktank, says exploring existing networks and seeking introductions from accountants or other professional advisers can be a good place to start.
“Establishing connections with different professionals can lead to new, quality referrals and in turn expand the broker’s client base,” Wright says.
“We believe there is an increasing rationale for brokers to expand their knowledge of alternative funding solutions. Understanding why and when to turn to different lenders is paramount, as we offer a distinct edge through a broad product offering, flexibility and a streamlined approach to assessing deals.”
Stuart adds that in many cases, residential brokers may find they’re already dealing with clients who are self-employed or SME owners.
“I think the opportunity now sits today for residential brokers that go, ‘Okay, I need to look beyond just doing this resi deal’,” Stuart says.
“There are opportunities to do asset finance. There are opportunities to do a commercial loan. That mindset just needs to shift a little bit with the book you already have.”
The flexibility of working with non-banks in the commercial space can also lead to more conversation and approvals, according to Lemon.
“With commercial loans now going up to 30 years, repayments can be stretched out to ease pressure, making more deals viable,” he says.
"Brokers who understand how to pair these alternative solutions with their SME clients’ needs can carve out a strong niche and help more businesses move forward, especially when traditional lenders say no.”
