The broker view of Australia’s commercial finance market

Businesses seek buffers

The most significant change that I’ve seen over the past 12 months has been specifically in the transport and construction industry. Rising diesel costs and recent insolvencies in the construction field have prompted many lenders to reassess their assessment of these industries. As a result, credit appetite has tightened, and lenders are increasingly requiring additional supporting documentation, including bank statements and financials, to mitigate risk.

We are seeing a large increase in cash flow lending enquiries. Businesses are seeking lines of credit and working capital facilities to protect themselves against rising supply and operating costs, as well as tax reform changes such as Payday Super.

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Planning takes top priority

I would say clients are seemingly looking even harder for the best deal and making sure they commit to a new asset they 100 per cent have the use for and have had in the planning stages for some time.

The key trends I’m seeing are the big banks’ market share decreasing and many second-tier or fintech lenders having some massive growth. This is due to current creditworthiness and how commercial banks are being seen in the current market.

My advice for new brokers would be to stay on top of your expenses! Forecast your tax, GST, slow receivables, and any equipment breakdowns. Make sure there is a buffer there to protect your cash flow.

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Borrowers seek flexibility

The commercial lending market remains competitive, but it has become increasingly sophisticated. Over the past 12 months, we’ve seen borrowers become more focused on the structure and flexibility of their funding, rather than simply chasing the lowest rate. At the same time, the continued growth of non-bank and private credit has created significantly more options outside traditional bank lending.

We’re seeing strong demand for asset finance, working capital, and structured debt solutions, particularly across capital-intensive sectors. Private credit is also playing a much larger role where borrowers need speed, flexibility, or a more tailored approach. Increasingly, businesses are looking at their entire capital structure rather than individual facilities in isolation.

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Select borrowers eye expansion

Over the past 12 months, we’ve seen growing interest in commercial expansion, alongside a recent lift in asset finance activity, with very little slowdown in the medical space.

Across MedX Finance and Exec Finance, clients are looking to invest in equipment, acquire businesses, and take greater control of their premises, more than ever. But many need help understanding what ‘buying commercial’ means, especially post the recent shifts, including the different funding requirements, the impact of the changes on their borrowing power, and the requirements for an investment property versus premises for their own business.

Some clients are coming to us as they are finding compelling opportunities, and lenders continue to compete for quality borrowers despite broader market pressures.

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Commercial competition heating up

The commercial asset finance market is still 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.

But when a deal isn’t straightforward, that’s where the real skill comes in. 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.

Businesses are under plenty of pressure right now. Fuel costs, regulation, staffing challenges, and tighter margins are all impacting cash flow, so we’re seeing clients focus much more on preserving working capital and structuring finance around their cash flow.

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Certainty matters more than rate

The commercial lending market is tougher than it was 12 months ago; there’s no doubt about that. Bank appetite remains genuinely open, but they continue to chase quality deals. Pricing for strong sponsors on prime assets sits in the low- to mid-6s, but the bar has shifted – underwriting is now more focused on cash flow reliability, balance sheet strength, and delivery feasibility, rather than just headline leverage or asset profile.

There’s some volatility in the non-bank and private lending market, but they’re still absorbing a large volume of quality deals, albeit getting far more selective. Liquidity generally remains strong across the board, with many of our active funds reporting capital availability and business-as-usual investor appetite. What we are seeing is LVRs quietly compressing in practice for certain asset classes and locations, even where headline policy may still list higher leverage options – credit committees are leaning harder on sponsor track record, financial strength, and clearly defined exit strategies.

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Quality deals remain in demand

The commercial lending market remains challenging, particularly given softer conditions across parts of the property market. As a result, lenders are generally more cautious, with greater emphasis on cash flow, serviceability, sponsor strength, and asset quality. That said, competition for quality transactions remains strong, and many banks and non‑bank lenders are willing to price aggressively to win the right client. Well‑structured borrowers with strong fundamentals continue to achieve attractive funding outcomes.

Lenders are becoming more selective, while competition for quality transactions has intensified. We’re also seeing increased demand for refinancing, working capital facilities, and debt restructuring as businesses manage higher operating costs and tighter cash flow. Non-bank lenders continue to gain market share by providing greater flexibility and faster execution, particularly for more complex transactions.