Commercial lending diverged sharply in FY26, with major banks tightening credit policy while non-bank and alternative lenders moved the opposite way, loosening rules and competing hard to deploy capital, according to FBAA.
The findings come from an analysis of around 10,000 commercial settlements over the past financial year by commercial brokerage Valiant Finance.
The trend isn't confined to Valiant's own settlement data. The RBA's February 2026 Bulletin independently confirmed the non-bank share of business lending has grown significantly since 2022, particularly for smaller SME loans, driven partly by reduced APRA capital requirements on banks' SME lending.
That reshuffling in lender appetite is playing out against a backdrop of surprisingly stable pricing.
Although the Reserve Bank's cash rate swung between 3.6% and 4.35% across the year, commercial lending rates barely moved. Asset finance pricing stayed in a tight band of 10.9% to 11.2%, while median interest rates edged down 0.3 basis points to 10.49%.
The data suggests commercial lenders absorbed much of the RBA's volatility rather than passing it on to borrowers, giving brokers more confidence in the accuracy of funding conversations with clients — and a case for revisiting refinancing options for clients sitting on older, higher-rate facilities.
Loan sizes climbed steeply, with average unsecured working capital loans up 20% to $58,000, peaking at $67,000 in the December quarter. Much of that growth was driven by banks pulling back from businesses with tax debt, leaving non-bank lenders to expand into that space with faster approvals and larger limits.
Newer businesses also fared better than in previous years. Settlement rates for businesses aged six to twelve months rose 6% year-on-year for asset finance, putting them roughly on par with businesses trading for two years or more. GST registration proved a further advantage, lifting settlement rates by 4.5% across both cash flow and asset finance applications.
Credit history is being weighed more holistically too. Settlement rates for borrowers with credit scores below 459 jumped 18%, while scores in the 650–720 range rose 4%. Businesses with "good" credit now settle at rates once reserved for those with "very good" scores just a year ago.
It's not just lenders driving this. ScotPac's SME Growth Index found 92% of Australian SMEs have used, or would consider using, a non-bank lender for their commercial finance needs.
Borrowers also shifted how they structure debt. Settled term loans rose 13%, while revolving credit facilities fell 18% in volume — though the loans that did settle grew substantially, with average revolving facility sizes up 35% to $82,000.
That shift, paired with SMEs' growing willingness to look beyond the major banks, points to a broader opening for brokers to place clients — new, credit-challenged or simply underserved by the Big Four — who may previously have stalled at the first hurdle.
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