The Shift SME Economy Index

Defining the SME economy

SME, short for small and medium enterprise, is used widely across official statistics, lenders and commentators, but defined inconsistently. That makes figures about the sector hard to compare from one source to the next. This page sets out the boundary the Shift SME Economy Index works to, how the main external sources map onto it, and why that consistency matters, both for comparing figures across sources and as new data is published over time.

The long view

Banks have moved from business to housing

Over the past three decades Australian banks have steadily reallocated credit away from business and towards housing. Business credit was more than twice housing credit in the early 1990s; housing has since overtaken it and now sits at almost twice the business book.

The shift is structural, driven in large part by capital rules that make mortgage lending more attractive than business lending for the banks, and it has left SMEs competing for a shrinking share of bank balance sheets.

Australian bank credit, housing versus business, 1990 to 2025.

Source: RBA D2 (Credit and Lending Aggregates).
The borrower size

Within business lending, the larger end is better served

The tilt towards larger borrowers extends into business lending. Since mid-2024, bank credit to large businesses has grown roughly twice as fast as credit to small businesses.

The balance-sheet capacity banks allocate to business is flowing disproportionately to the larger end, leaving smaller businesses progressively underserved.

Exhibit B: Bank business credit by borrower size, indexed to June 2024

Source: RBA D14 (Lending to Businesses by size)
Secured vs unsecured

The credit that suits a growing business is the scarcest

Within the banking system, the overwhelming majority of SME lending is secured, most of it resting on residential property. Unsecured credit is a thin slice of the total, around 4.2% of bank SME lending.

Unsecured credit is the form best suited to a growing business. It funds stock, wages and receivables rather than being limited by the value of the owner’s property. Its scarcity inside the banking system is precisely where non-bank lenders have expanded.

Only includes bank lenders (authorised deposit-taking institutions, or ADIs, the RBA-regulated banking system) and registered financial corporations with $2 billion business credit or more, as per RBA D14. The RBA notes that non-bank unsecured lending is not well captured in regulator data, so this view understates the total market the next section sizes.

Bank SME lending: total versus unsecured

Source: RBA D14.1 (Feb 2026); RBA Bulletin Oct 2025, Graph 12.
Non-banks

Non-banks have taken the larger share

Non-bank lenders sit largely outside the data collected by regulators. Combining the bank figures with non-bank working-capital books reported to ASIC gives an approximate view of the total unsecured SME credit market, where non-banks hold a meaningful and growing share.

On those filings, total non-bank lending accounts for around 26% of total SME unsecured lending in Australia. Shift is the largest non-bank provider of unsecured credit to Australian SMEs, with a 10% share.

Exhibit D: The combined unsecured SME credit market (~$9.7bn).

Source: Bank unsecured from RBA (D14.1; Bulletin Oct 2025); non-bank from ASIC filings plus Shift internal data. Unsecured defined as not real property secured. We identified all AFIA OSBL Code signatories and other known providers of unsecured working capital finance in Australia. For those meeting ASIC's large proprietary company thresholds (at least two of: $50m+ consolidated revenue, $25m+ consolidated gross assets, 100+ employees), we aggregated unsecured lending from their most recent ASIC filing, using segment information to isolate the unsecured portion where disclosed. Lenders not separately disclosing this split were excluded. Shift's figure is based on latest internal data, not an ASIC filing.
Bank figures are sourced from the RBA D14 and include credit from both bank lenders and registered financial corporations with $2 billion business credit or more. Shift and Other non-bank figures only include non-bank lenders with less than $2 billion business credit – there is no overlap between the categories.
Why it matters

A single mismatch sits beneath all of it

The credit picture is consistent across every cut. Banks have moved their balance sheets towards housing and, within business lending, towards larger borrowers.

The unsecured credit that suits a growing SME is a thin sliver of what remains, and most of it is gated by property security the owner may not have or want to use for their business. Non-banks have stepped into that gap, but the whole unsecured SME market, bank and non-bank combined, is still almost only $10bn. Set against an SME economy that would be the country’s largest industry if counted as one, that is a small pool of credit relative to the SME economy’s size.

That mismatch, between how much the SME economy contributes and how little growth-oriented credit is structurally available to it, sits at the centre of the SME credit landscape. Whether scarce credit is widening the gap between stronger and weaker SMEs is a question the index is built to track.