Equifax Quarterly Commercial Insights: March 2025
- Overall business credit applications increased by +1.6% (vs March quarter 2024)
- Business loan applications grew +3.9% (vs March quarter 2024)
- Asset finance applications fell by -2.3% (vs March quarter 2024)
- Trade credit applications declined -3.3% (vs March quarter 2024)
SYDNEY – May 2025 – Demand for commercial credit improved in Q1, with an interest rate cut helping bolster confidence across both the commercial and consumer markets. However, the latest Equifax data shows this confidence was short-lived, dipping in March due to global geopolitical factors.
According to the Equifax Quarterly Commercial Insights - March 2025, the outlook for commercial credit demand is uncertain despite anticipation of further rate cuts, as varying sector vulnerabilities to evolving tariffs create market volatility.
While overall commercial applications rose, commercial credit demand among Small and Medium Enterprises (SMEs) fell by -8.25%, putting it well below demand observed in Q1 of prior years.
Scott Mason, General Manager Commercial and Property Services, Equifax, said: “The dual pressures of longterm high interest rates and increased market unpredictability have had a significant impact on small and medium business in particular.
“Without credit, expansion is difficult for SMEs. The reduced demand suggests that SMEs are battening down the hatches and focusing on efficiency gains through cost cutting rather than productivity gains that rely on investments, like technology, training or hiring.”
SMEs struggling in construction; businesses of all sizes flail in retail and hospitality
SMEs in construction experienced a significant 18% drop in credit demand in Q1, with this reduction most pronounced in the eastern states. Additionally, more high-risk SMEs applied for credit in Q1 2025 compared to the previous year, suggesting that lower quality constructors are strapped for cash and seeking supplemental funding to keep their businesses afloat.
The hospitality sector experienced a severe downturn this quarter, with demand reducing by 16.9% and insolvencies rising by 32%. The retail industry also struggled, seeing demand reduce 7.4% and insolvencies increase 24%. Both of these industries are highly vulnerable to external factors like the ongoing squeeze on consumers’ disposable incomes and higher rents.
“Interestingly, credit demand from larger businesses in both hospitality and retail fell sharply while SMEs experienced a smaller drop. In these industries bigger businesses are more likely to be carrying larger overheads and have less agility or adaptability compared to SMEs, so will be looking for ways to reduce their spending as they weather the difficult economic conditions. On the other hand, SMEs appear to be reaching for credit to fund their ongoing business operations,” Mr Mason said.
Demand Change - Q1 2025
The Quarterly Insights measure the volume of credit applications for business loans, asset finance and trade credit.
Overall commercial credit demand increased by +1.6% in Q1 2025 compared to the same quarter the previous year. This was driven by healthy business loans demand (+3.9%) during the quarter, mirroring improved business confidence. On the other hand, trade credit demand declined -3.3% and asset finance applications declined -2.3% in Q1.
Q1 2025 saw a 28% jump in total insolvencies vs the same period in 2024, with Victoria and NSW being the primary drivers.
IMAGE 1: Overall Credit Score Change, 2025 Q1
IMAGE 2: Total Market Insolvencies, 2025 Q1
ABOUT EQUIFAX INC.
At Equifax (NYSE: EFX), we believe knowledge drives progress. As a global data, analytics, and technology company, we play an essential role in the global economy by helping financial institutions, companies, employers, and government agencies make critical decisions with greater confidence. Our unique blend of differentiated data, analytics, and cloud technology drives insights to power decisions to move people forward. Headquartered in Atlanta and supported by nearly 15,000 employees worldwide, Equifax operates or has investments in 24 countries in North America, Central and South America, Europe, and the Asia Pacific region. For more information, visit www.equifax.com.au or follow the company’s news on LinkedIn.
FOR MORE INFORMATION
[email protected]
NOTE TO EDITORS
The Equifax Quarterly Commercial Insights (formerly Business Credit Demand Index) measures the volume of credit applications that go through the Equifax Commercial Bureau by financial services credit providers in Australia. Based on this, it is considered to be a good measure of intentions to acquire credit by businesses. This differs from other market measures published by the RBA/ABS, which measure new and cumulative dollar amounts that are actually approved by financial institutions.
DISCLAIMER
Purpose of Equifax media releases:
The information in this release does not constitute legal, accounting or other professional financial advice. The information may change, and Equifax does not guarantee its currency or accuracy. To the extent permitted by law, Equifax specifically excludes all liability or responsibility for any loss or damage arising out of reliance on information in this release and the data in this report, including any consequential or indirect loss, loss of profit, loss of revenue or loss of business opportunity.
