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The number of SME loan applications has jumped by 45 per cent in the first quarter of the financial year 2025 at Banjo, according to the lender.
Non-bank lender Banjo Loans (Banjo) has seen a spike in business loan applications in the first three months of FY25, with applications rising for the first time across the past six consecutive reporting periods (since the quarter ending March 2023).
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According to Banjo’s latest small and medium-sized enterprise (SME) Business Barometer – there was also a 43 per cent increase in the value of business loan applications from SMEs compared to the previous quarter.
The SME lender revealed that while business sentiment has been subdued over the past year (with the number of applications submitted down 8 per cent on the same time last year), more businesses are seeking longer finance terms to help them manage constrained conditions.
Indeed, the lender suggested the leading factor to its spike in applications was its extended loan tenors, which recently expanded from 36 months to a maximum of 60 months.
CEO Guy Callaghan said: “The spike in applications this past quarter demonstrates that small-business owners like the idea of more manageable repayment sums being spread over a longer period.”
Who is borrowing?
The Banjo Barometer revealed that larger SMEs were particularly looking to borrow – with businesses with a turnover of more than $20 million increasing their borrowings by 50 per cent over the quarter and those earning between $10 million and $20 million by 73 per cent.
Financial and insurance services businesses; accommodation and food services; and professional scientific and technical services were among those that boosted their borrowing compared to the previous quarter and the previous year.
Indeed, financial and insurance services applications were up 330 per cent over the year and 95 per cent over the quarter.
Other sectors that increased their borrowing this quarter included electricity, gas, water, and waste services (167 per cent), transport, postal and warehousing (73 per cent) and construction (29 per cent).
On the flipside, manufacturers submitted fewer loan applications, both across the quarter (-12 per cent) and the year (-27 per cent), according to the Banjo Barometer.
Declinations on the up
In tandem with a higher volume of applications, Banjo noted that more SMEs were being rejected for finance, the non-bank lender revealed.
Over the past quarter, there was a 35 per cent increase in applications being knocked back, or a 118 per cent increase when compared to the same period in the last financial year.
This followed on from an 86 per cent annual rise in rejections in the previous quarter.
Banjo noted that even with increased payment terms, an inability to service a new loan was the leading reason for declined applications (along with a failure to meet the minimum eligibility criteria).
Agricultural and Fishery Services and Health Services’ borrowing capacity dipped by 44 per cent and 9 per cent, respectively, this quarter when compared to the previous Banjo SME Business Barometer Report, for example.
Location is also playing a factor, according to Callaghan. “Many SMEs are still experiencing financial hardship, and while borrowing trends are shifting, SMEs in Qld, WA and the Northern Territory are bucking that trend, with fewer loan applications submitted,” he said
“It’s also important to note that many SMEs are still in recovery mode following the significant year-on-year decline in total loan value we reported on for the final quarter of 2024.
“The latest data reveals that SME businesses in Victoria, South Australia and New South Wales are borrowing more, while in certain sectors – particularly accommodation and food, IT and media, administration services and healthcare – we’ve seen significant resilience and borrowing growth.”
He added: “This suggests that while the overall economic picture may be subdued, there are areas of strength that could be harnessed for growth.”
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