This trend is largely driven by favorable conditions, including rate cuts and the extension of the Instant Asset Write-Off scheme. These factors have created an environment conducive to capital investment, enabling SMEs to acquire essential equipment and technology necessary for maintaining competitiveness.

Key insights from the data include:

• Competitive Pricing: Intensified competition among lenders has led to more attractive pricing in the asset finance market, with average rates decreasing by over one percentage point between early 2024 and late 2025.
• Strategic Investments: SMEs are prioritizing investments that directly support revenue generation and operational efficiency, such as equipment, vehicles, and technology.

However, while asset finance is on the rise, there is a noticeable decline in working capital enquiries. This suggests that SMEs are exercising caution with short-term debt, reflecting a conservative approach to borrowing amid economic uncertainties.

In this evolving financial landscape, SMEs are advised to:

• Assess Financial Health: Conduct thorough evaluations of financial positions to determine the feasibility of taking on new debt.
• Explore Financing Options: Consider various financing avenues, including both traditional banks and non-bank lenders, to find solutions that best align with business needs.
• Plan Strategically: Focus on investments that offer long-term benefits and enhance productivity, ensuring sustainable growth.

By adopting a strategic approach to asset finance, Australian SMEs can navigate economic challenges effectively and position themselves for future success.