Australian small and medium-sized businesses are increasingly enquiring about working capital rather than expansion finance, as tax debt pressure and softening confidence begin to bite into cash flow, according to a commercial finance broker.
Murray Mayes (pictured), director of Premium Finance Group Australia, said enquiries about Australian Taxation Office (ATO) payment arrangements had become more common, in line with a broader increase in small business tax debt.
A recent Australian National Audit Office report found small businesses account for $35.9 billion of the country's $54.2 billion in collectable tax debt, with debt up 118% between 2018–19 and 2024–25.
Equifax's May Business Market Pulse points to a similar pattern, with Brad Walters, Equifax's general manager of commercial, saying businesses were "delaying their tax obligations to keep cash on hand" — a sign of mounting cash-flow stress across the sector.
Mayes said that pattern matched what he was hearing directly from clients.
"One conversation doesn't tell you much. But when you start seeing the same types of enquiries across different industries, it suggests businesses are becoming much more cautious about preserving cash," he said.
Mayes linked the shift to broader sentiment. He noted the NAB Monthly Business Survey recorded confidence at -5 in June, with conditions below their long-run average and profitability subdued. The same survey also showed the reading marked a third straight monthly improvement, recovering from the sharp hit triggered by the Middle East conflict earlier in the year — though confidence remains deeply negative and well below its long-run average.
The Westpac–Melbourne Institute Consumer Sentiment Index showed a similar picture: July sentiment ticked up but remained among the weakest in its 50-year history, with households continuing to report pressure on family finances.
"Whenever confidence falls, businesses tend to delay investment, consumers become more cautious and eventually that starts affecting cash flow," Mayes said.
He added that owners who would normally discuss expansion were instead asking what funding they should have in place should conditions worsen.
Despite the rise in enquiries, Mayes said lenders had not materially tightened.
"Many lenders are still actively looking to write quality business," he said. "This isn't a credit crunch. Businesses can still access finance. What's changed is that more owners want appropriate funding in place before they actually need it."
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