Australian Commercial Credit Demand Increases by 3% in Q3 2025

Queensland led the surge with a 5% annual increase in business loan applications, followed by New South Wales and Western Australia, each recording a 4% rise. South Australia also experienced a 2% increase. This regional growth underscores the strengthening confidence among businesses in these areas.

Brad Walters, General Manager of Commercial at Equifax, attributed this upward trend to improved credit profiles among businesses. He noted that the higher demand for commercial credit is supported by greater market confidence, as evidenced by an influx of high credit quality entities with steadily rising average credit scores.

The data also revealed a 4.2% year-on-year increase in credit appetite among larger corporations, while small and medium-sized enterprises (SMEs) saw a 2.7% lift. This indicates a broad-based recovery and expansion across different business sizes.

Insolvency volumes have also shown positive signs, with a 2.1% year-on-year decline-the first quarterly drop since 2021. The construction sector, which has historically accounted for a significant number of insolvencies, reported 2,630 cases between January and September 2025. However, there are signs of stabilization, suggesting a slow recovery within the industry.

Despite these encouraging figures, the economic outlook remains mixed. While business conditions have improved, factors such as labor market resilience are influencing expectations regarding future interest rate adjustments by the Reserve Bank of Australia (RBA). Additionally, varying conditions across sectors like retail, construction, and small business credit highlight the need for cautious optimism as the economy progresses into 2026.

In summary, the third quarter of 2025 has demonstrated a notable increase in commercial credit demand in Australia, particularly in the eastern states. This growth reflects a strengthening business sector, supported by improved credit profiles and a decline in insolvency rates. However, businesses and lenders should remain vigilant, considering the mixed economic signals and sector-specific challenges that lie ahead.