Business loan applications up 6% while company exits rose 12%. Equifax data reveals mounting pressure across Australian enterprises.
What’s happening: Credit shopping among high-risk Australian businesses has surged from 39% to 49% in just one month, according to Equifax data. Business loan applications rose 6% while insolvencies hit a five-year high, with construction and hospitality particularly affected by mounting economic pressures.
Why this matters: Credit shopping behaviour often signals business distress and difficulty accessing finance on favourable terms. With company exit rates up 12% and fewer new businesses starting, these trends could undermine economic recovery efforts and productivity growth across key Australian industries.
The numbers tell a stark story of mounting business pressure across Australia. In February 2025, 39% of high-risk credit enquiries involved businesses shopping around multiple lenders. By March, that figure had jumped to 49%, marking one of the sharpest increases in credit shopping behaviour on record.
According to Equifax’s latest Quarterly Commercial Insights for June 2025, this surge in credit hunting reflects deeper economic stress as businesses struggle to secure financing or find favourable lending terms. Overall business credit applications increased 5.2% compared to the same quarter last year, with business loans leading the charge at 6.0% growth.
“The increase in credit shopping behaviour is a worrying trend, as it can be an indicator of stress and suggests that a business may be struggling to gain access to credit or be unable to secure favourable terms from lenders,” explains Brad Walters, General Manager, Commercial at Equifax.
Shopping for survival
The credit shopping phenomenon isn’t spread evenly across the Australian business landscape. Certain industries are showing particularly acute signs of distress, with construction and professional services leading concerning trends.
In the second quarter of 2025, more than half of enquiries from higher-risk entities in construction (51%) and professional services (51%) involved shopping around for credit. The hospitality sector, while slightly lower at 39%, has seen its credit shopping rates increase year-on-year as cost-of-living pressures continue to impact consumer spending.
The size of businesses also plays a crucial role in credit shopping behaviour. Small and medium-sized entities are significantly more likely to shop around for credit compared to their larger counterparts. One in two enquiries from higher-risk SMEs involved credit shopping in the second quarter, highlighting the particular challenges facing smaller businesses in the current economic climate.
Interestingly, large businesses have become 10% less likely to credit shop compared to 12 months ago, suggesting that bigger enterprises either have better access to credit or are being more conservative with their financing strategies.
Industries under pressure
The construction industry’s credit shopping behaviour reflects broader challenges facing the sector. Beyond the 51% of higher-risk construction businesses shopping for credit, the industry has also experienced significant disruption in terms of business entries and exits.
Construction saw a 20% decrease in new business entries over the past 12 months, while exit rates were 3% higher than the previous year. This combination of fewer new players entering the market and more businesses leaving creates a concerning picture for an industry that’s crucial to Australia’s infrastructure development and housing supply.
Professional services faced even more dramatic changes, experiencing a 42% decrease in new business entries in the past 12 months. This represents the most significant decline across all industries tracked in the Equifax data, suggesting that economic uncertainty is particularly impacting service-based businesses that often rely on discretionary spending from other companies.
Hospitality, another sector showing elevated credit shopping behaviour, saw a 13% decrease in new business entries. The industry continues to grapple with the ongoing effects of cost-of-living pressures on consumer spending, making it harder for both new and existing hospitality businesses to maintain profitable operations.
Fewer starts, more exits
The broader business formation trends paint a picture of economic caution and stress across the Australian market. Year-on-year in FY25, 9% fewer entities were created across the entire market, while company exit rates increased by 12%.
This divergence between business creation and destruction suggests that entrepreneurs and investors are becoming more risk-averse, while existing businesses face mounting pressures that are forcing some to close their doors. The combination creates a net reduction in business activity that could have longer-term implications for economic growth and employment.
The trend is particularly concerning when viewed alongside the credit shopping data, as it suggests that businesses are not only struggling to access finance but are also finding it increasingly difficult to maintain operations once established.
Five-year insolvency peak
Perhaps most alarming is the surge in business insolvencies, which reached a five-year high with a 21% increase in the first half of 2025. This represents the highest level of business failures since the immediate aftermath of the COVID-19 pandemic’s initial economic shock.
Construction businesses saw insolvencies rise 12.4%, while hospitality experienced an even steeper 27.8% increase in business failures. These figures align closely with the industries showing the highest rates of credit shopping behaviour, reinforcing the connection between difficulty accessing finance and business survival.
The insolvency data provides a sobering reality check on the credit shopping trends. While some businesses may successfully find alternative financing through their search across multiple lenders, others appear to be running out of options entirely.
“Together, the subdued growth and increasing risk profile of Australian businesses across key segments could hinder efforts to strengthen economic growth and improve productivity,” Walters warns.
The convergence of these trends, higher credit shopping rates, increased business failures, and reduced new business formation, suggests that Australia’s business sector is facing a period of significant stress that could have lasting implications for economic recovery and growth prospects.
For lenders, the data presents both opportunities and risks. While demand for credit is growing, the increasing proportion of higher-risk borrowers and elevated insolvency rates require careful risk assessment and pricing strategies to avoid significant losses as economic pressures continue to mount.
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