One area where non-banks have traditionally played a valuable role is commercial lending, particularly for small and medium-sized enterprises (SMEs), and a challenging operating environment suggests this role could now be more important than ever.
SMEs across the country continue to bear the brunt of increasing input costs and inflationary pressures. Regulatory changes, such as new Payday Super rules and an increase to the minimum wage, have added further pressure to cash flows.
Together, these pressures have made non-banks’ ability to step up and support small businesses increasingly valuable.
This importance was underscored in the latest Prospa SME Sentiment Report, based on a national survey of business owners in May 2026.
While a clear majority of respondents said they expect to remain cash flow-positive over the next 12 months, confidence had fallen, with 60 per cent of SMEs saying they are confident they can do so, down from 70 per cent in February.
Nearly one in two (46 per cent) of respondents said they had lifted prices during the three months prior to offset the impact of inflation and higher input costs.
And almost one in five (18 per cent) respondents said they had no cash reserves whatsoever.
At the time, Prospa general manager, sales and partnerships Roberto Sanz noted that three in 10 SMEs surveyed now expected to access external funding over the next 12 months.
“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.”
Focus on solutions
In response to these pressures, non-banks have been active, developing new products and propositions to address common SME funding needs.
The June 2026 ScotPac SME Growth Index found that the vast majority (92 per cent) of SMEs surveyed would use or consider using a non-bank lender for their commercial finance needs.
More than a third (34 per cent) of the respondents to the SME lender’s survey said they had already done so in the past 12 months, using non-bank finance for capital expenditure, working capital, cash flow management, and operational resilience.
At the time, ScotPac’s CEO Jon Sutton said non-bank funding was no longer being seen as a niche, secondary, or last-resort funding option.
“More SMEs are integrating flexible funding solutions into their core business strategy to improve cash flow certainty, unlock working capital tied up in assets like invoices, and reduce pressure on personal balance sheets,” he said.
“Asset-based lending solutions, such as invoice finance and working capital facilities, allow businesses to access funding based on the strength of their receivables and trading activity, rather than relying solely on property-backed lending.
“That flexibility is becoming increasingly valuable as SMEs navigate rising operating costs, uneven trading conditions and tighter credit environments.”
Sutton also said many businesses are becoming strategic about liquidity, cash flow resilience, and reducing concentration risk, creating further opportunities.
“Brokers who understand asset-based lending and working capital options are increasingly well positioned to guide SMEs through changing market conditions,” he said.
Nathan Evans, senior business development manager at Bizcap, which sees around 70 per cent of its funding volume coming from line-of-credit products, also said there has been a growing demand for ongoing access to capital rather than a one-off sugar hit.
In this environment, brokers are increasingly coming to the table as trusted partners who help businesses build finance strategies around longer-term funding needs.
“We’re seeing the role of the broker evolve from arranging a single loan to constructing tailored funding strategies,” he said.
“Increasingly, brokers are bringing together blended solutions that combine asset finance, commercial finance, cash flow lending and revolving facilities to ensure businesses have the right type of capital for different needs.”
Where brokers step in
Amid a challenging and increasingly complex operating environment, brokers have an important role to play in helping their SME clients navigate their options.
Recognition of this crucial role came in May, when the Commercial & Asset Finance Brokers Association of Australia (CAFBA) and Mortgage & Finance Association of Australia (MFAA) unveiled a shared member resource to equip brokers with the tools to step in sooner and aid any small-business clients experiencing financial stress.
The two broker associations said they had co-developed the guide as an extension of their work with a wider alliance led by the Council of Small Business Organisations Australia (COSBOA), alongside the Australian Restructuring Insolvency & Turnaround Association (ARITA), CPA Australia, and the Institute of Certified Bookkeepers (ICB).
They said the pack would give brokers a more structured way to approach difficult conversations to help clients act before problems harden into arrears, defaults, or forced exits.
At the time, MFAA CEO Anja Pannek said small business finances rarely “sat in neat silos” and that brokers were increasingly being asked to help clients interpret that complexity.
“Small-business clients often manage interconnected financial pressures across their business and household. In that environment, timing matters,” Pannek said.
“Brokers play a critical role in helping clients navigate that complexity, not just by arranging finance, but by helping them understand their options, manage risk and make more informed decisions.”
So, what do these conversations look like in practice?
The brokers who do well are the ones that are asking better questions. They want to know where the client’s business is actually heading, not just where it sits today”
- Stephen Lew, state manager (NSW/ACT), Lumi
In an appearance on The Adviser’s In Focus podcast in April, Earlypay CEO James Beeson suggested that one way to engage clients is through stress-test scenarios.
“Stress-testing client scenarios for the current environment is critical. Brokers should be asking: what happens if you can’t access stock for a while? What if consumer demand falls and order volumes decline?” he said.
“From there, it’s about pressure-testing operational needs. Do you actually need the additional equipment you planned for if growth slows? Or, if demand was expected to increase and you’ve already committed to new orders, how exposed are you?
“In some cases, it may be about holding capacity for growth – but in others, it’s about rationalising assets, reducing excess equipment, and preserving cash if demand doesn’t come through as expected.
“I think being as holistic as possible is the best way to add value to your SME clients.”
In a separate In Focus appearance in August, Stephen Lew, state manager (NSW/ACT) at SME lender Lumi, also highlighted the importance of knowing which questions to ask clients.
“What actually separates people is just curiosity,” he said.
“The brokers who do well are the ones that are asking better questions. They want to know where the client’s business is actually heading, not just where it sits today.
“Because once you sort of understand that and what somebody’s trying to build, finding the right funding for that is actually the easy part.”