Business credit scores just hit a three-year high, but don’t celebrate yet. Equifax’s latest data shows a tale of two recoveries across Australian enterprises.
What’s happening: Business loan demand rose 4.1%, while trade credit demand fell 4.9%. Business credit scores reached a three-year high, according to Equifax’s Business Market Pulse for Q4 2025.
Why this matters: Large businesses are accelerating credit appetite with double-digit growth in some sectors, while SMEs navigate a steadier, more cautious recovery pathway.
Large Australian businesses are leading a credit demand recovery that’s left smaller operators trailing in their wake, according to new data revealing a stark divide in how enterprises are navigating post-inflation conditions.
The latest Equifax Business Market Pulse for Q4 2025 shows overall business credit demand increased 2.3% compared to the same period in 2024. However, this headline figure masks a multi-speed recovery where large businesses in sectors like hospitality are posting credit demand growth as high as 19.4%, while the broader SME sector exhibits only gradual improvement.
Business loan demand increased 4.1% year-on-year, and business loan quality rose by two points to achieve a three-year high. Yet SME credit demand remains 9% below Q1 2022 levels, indicating small businesses are still climbing back from the inflation shock.
Large players dominate
“The +4.5% year-on-year increase in SME demand in Q4 2025 is a positive signal, though it reflects a more measured recovery pace compared to larger enterprises,” said Brad Walters, General Manager of Commercial at Equifax Australia.
“While large-scale businesses appear to be accelerating their credit appetite more quickly, SMEs appear to be navigating a steadier path upward as they balance growth with external factors such as the pressures of inflation.”
Walters explained that smaller businesses don’t always have the means to absorb potential shocks as easily as their larger competitors, leading them to choose a more sustainable climb back to pre-pandemic credit levels.
The rise in business credit scores appears linked to a shift in the market mix, with more enquiries coming from larger businesses that typically carry higher credit scores and greater reserves.
“When we look at the past quarter, it appears to be a story of a change in the market mix. We’ve seen more enquiries from larger businesses, which often have more reserves and carry higher credit scores,” Walters said.
“This shift in the overall enquiry profile, where the larger players are currently more credit active than smaller players, is what I see driving this upward trend in credit quality.”
Trade credit demand declined 4.9% year-on-year overall, indicating businesses are making fewer transactions than they were in Q4 2024.
Hospitality shows widest gap
Three sectors, hospitality, construction and retail, highlighted the starkest differences in financial appetite between large businesses and SMEs during Q4 2025.
Hospitality showed one of the largest gaps. Credit enquiries from large hospitality businesses drove increased demand across trade credit (up 19.4%), business loans (up 9.1%) and asset finance (up 5%).
“The hospitality sector shows one of the widest discrepancies in overall demand for large businesses compared to SMEs in Q4 2025. While trade credit demand in large hospitality businesses increased by +19.4% year-on-year, overall credit demand growth from SMEs (+1.9% year-on-year) was marginal,” Walters said.
Despite high insolvency levels, the hospitality sector showed encouraging signs with a 9% reduction in insolvencies compared to Q4 2024, alongside a 1.5-day reduction in Days Beyond Terms for trade payments over the same period.
Construction faces pressure
In construction, insolvencies remained high but relatively unchanged year-on-year. Credit demand patterns, however, told a different story.
“The demand we are seeing could suggest big builders are confidently securing materials for their project pipelines, driving a +6.6% year-on-year (vs Q4 2024) increase in trade credit,” Walters stated.
“Now, during this same time period, small construction businesses appear to be avoiding broad debt, seen by a slight reduction (-0.7%) in overall demand, and only borrowing for specific tools via asset finance (+4%).”
Large retailers increased national demand by 7.9% year-on-year, compared to a stagnant 0.7% for SMEs in Q4 2025. Large NSW retailers were particularly active, increasing their business loan enquiries by 25%.
“While we have seen strong demand growth among large retailers, the wider sector still shows some signs of pressure, with the past quarter revealing a substantial +64% increase in retail insolvencies year-on-year,” Walters concluded.
The diverging paths between large enterprises and SMEs reflect broader patterns in Australian business conditions, where smaller operators continue managing elevated costs and tighter margins while larger players leverage scale advantages to pursue growth opportunities.
Quality over quantity
The practical implications show larger businesses currently dominate Australia’s credit landscape, driving both demand and quality metrics upward. Meanwhile, SMEs maintain a more conservative approach, prioritising sustainability over aggressive expansion as they navigate lingering inflation pressures.
For credit providers and policymakers, the data suggests a need for differentiated approaches that recognise the distinct challenges facing businesses of different sizes. The three-year high in business credit scores reflects improving conditions among larger, more resilient players rather than broad-based recovery across the entire business spectrum.
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