With another calendar year drawing to a close, businesses across Australia are turning their attention to what comes next. For some, that could mean investing in new equipment or assets to support their plans in the year ahead.
But, as with many aspects of commercial finance at the moment, a challenging operating environment appears to be weighing on business decisions.
Higher borrowing costs, tighter credit standards, and rising operating expenses are combining to create an environment that potentially makes it harder for businesses to justify taking on new debt, particularly for larger or non‑essential assets.
Recent data from consumer credit reporting agency Equifax suggests some businesses are holding back on asset investment, with demand for asset finance falling 12.7 per cent year on year in August 2026, despite overall demand for business loans increasing 11.3 per cent over the same period.
The August decline followed falls of 9.1 per cent in July and 2.4 per cent in June.
This trend was also reflected in business investment, with new capital expenditure on equipment and machinery falling 8.9 per cent to $25.1 billion in the June 2026 quarter, according to the latest Private New Capital Expenditure and Expected Expenditure, Australia figures from the Australian Bureau of Statistics (ABS).
Commenting on the data, Equifax general manager of commercial Brad Walters says what began as a cautious delay appears to have crystallised into a genuine trend.
“What began mid-year as a cautious delay on equipment upgrades has now developed into a widespread asset capital pullback,” Walters says.
“Across every major industry sector, businesses appear to be extending the operational life of existing machinery, vehicles, and IT infrastructure rather than taking on new long-term debt liabilities.”
For brokers on the ground, that caution is translating into a tougher market.
Sam McDonald from brokerage Atlas Broker says the market has tightened noticeably over the past 12 months.
“Rising rates have pushed up the cost of borrowing, and lenders are applying greater scrutiny to cash flow and credit quality (especially for non-primary assets),” he says.
“Transport is a sector feeling this particularly acutely, with lenders taking a much closer look at deals due to the escalation in diesel costs, etc. Speaking with funders and other brokers, volumes are down across the board.”
Competition from original equipment manufacturers (OEMs) has created another challenge for asset finance brokers, according to McDonald.
“A key trend and a real challenge I’m seeing is OEMs increasingly offering subsidised finance directly to customers, in an attempt to win sales (often with rigid structures),” he says.
“Promotions for 0 per cent finance certainly make for tougher conversations with newly referred clients when the cash rate sits with a 4 handle.”
Meanwhile, Will Hamer of Victoria-based brokerage Hamer Asset Finance says businesses want to grow but are watching every dollar.
According to Hamer, uncertainty around the instant asset write‑off (IAWO) has also weighed on activity, with businesses previously unsure as to whether the measure would be made permanent (the $20,000 IAWO was officially made permanent in August).
“Cash is king right now, and an immediate deduction brings forward and maintains a business’s cash position, which is imperative to small business survival,” he says.
“With ATO biting at the heels of businesses, lifting that threshold again would do more to get businesses investing than anything else on the table.”
The broker role
So, what can brokers expect from the next 12 months in asset finance?
Despite this apparent slowdown, Kellie Crocker, a broker at Queensland-based brokerage RLA Finance, says that the asset finance market has become highly competitive.
“We’re seeing more brokerages entering the space, mortgage brokers diversifying into asset finance, and strong competition from dealer finance – particularly on straightforward low doc deals,” she says.
However, Crocker says brokers with asset finance expertise will stand out.
“When a deal isn’t straightforward, that’s where the real skill comes in,” she says.
“Complex transactions require someone who understands credit, can look beyond the numbers and can tell the story of the business to a lender.
“Without that experience, a good deal can quickly become difficult.”
Todd O’Reilly, CEO and founding partner at MedX Finance, says he’s seeing a similar trend, noting there has been very little slowdown in the medical space.
“Having a broker on your side who understands your full personal and business position means someone is watching lender appetite and negotiating suitable options across bank and non-bank lenders,” he says.
“Getting organised early puts you in a stronger position to act when the right refinancing offer or growth opportunity arrives.”
Meanwhile, Hamer says the cost pressures are being felt across the board.
“On the commercial side, the dominant need is equity release. Clients who own assets outright are borrowing against them and pushing that capital back into cash flow,” he says.
“On the consumer side, there’s a marked shift towards electric vehicles (EVs), driven largely by running costs.
Either way, running through the deal early on with a broker to get the right structure and facility in place is always beneficial”
- Sam McDonald, Atlas Broker
“The common thread is that everyone is watching the bottom dollar. The question clients ask isn’t ‘how do I expand?’. It’s ‘how do I get through the next two years without overextending?’”
McDonald also says businesses are increasingly focused on the numbers behind an asset purchase, including potential return and the cost of servicing finance.
“For borrowers, the most important consideration right now is to run the numbers to understand return on investment of the asset and whether they can comfortably service repayments (a good broker or accountant can assist here),” he says.
“Many sole traders and smaller operators are delaying capex given rates and uncertainty. Whilst others I’ve spoken with are going hard and actively expanding to take market share while competitors pull back.
“Either way, running through the deal early on with a broker to get the right structure and facility in place is always beneficial.”
