The SME Sentiment for August 2025 has just been released by Fifth Quadrant. We’ve summarised 9 key takeaways for brokers – and what they could mean for you and your SME clients.
Why this matters for brokers
Australia’s small and medium enterprises (SMEs) are entering FY2026 with strong ambitions – 35% plan to expand this year – but the reality is more complex. Cost pressures, labour shortages, and short-term revenue expectations (net +3%) are testing their resilience.
For brokers, this creates a big opportunity: SME’s need strategic funding partners who can help turn ambition into action by bridging the funding gap with tailored finance solutions.
Read on for how you can be the support that business needed to turn ambition into action.
The SME landscape: Key challenges right now
SMEs are walking a fine line between growth, stability, and risk management. The latest Fifth Quadrant SME Sentiment Tracker highlights four key challenges:
1. Labour market pressures
Hiring remains subdued, with vacancies at their lowest level in over a year.
- Job vacancies fell from 15% in June to 10% in July (lowest in over a year).
- Smaller SMEs are hit hardest, with vacancies sliding to just 7%
- Employers face:
- Rising wage demand
- Staff unwilling to commit to hours
- Shrinking applicant pool as participation falls
- Industries most affected (% of vacancies): Hospitality (22%), Health & Education (19%), Construction (15%), Services (12%), Distribution (11%), Production (11%), Retail Trade (10%).
| Takeaway #1: SMEs struggling to hire may seek finance for productivity tools, automation, or training to maintain output. |
2. Cost pressures & operational challenges:
Costs remain the number one challenge for SMEs, with other operational issues adding further strain.
- Cost pressures remain the top concern, despite some easing.
- Shifting customer behaviour and regulatory demands continue to test resilience.
- Compliance and supply chain disruptions are intensifying, partly due to tariffs.
| Takeaway #2: Businesses battling costs or compliance may need funding to improve efficiency, digitise operations, or manage inventory. |
3. Growth signals remain mixed
SME confidence is improving in patches, but short-term expectations and investment intentions are subdued.
- 35% of SMEs expect growth this financial year, but confidence is fragile.
- Short-term revenue expectations eased to just +3% (lowest since June 2024).
- Capital expenditure and marketing intentions both declined in July.
- Larger SMEs are cautiously reviving capex, particularly in IT, machinery, and plant/equipment.
| Takeaway #3: Smaller SMEs may sit tight, but larger, established clients are warming back up to investment – creating opportunities for growth-focused funding. |
4. Finance demand & loan stress
Finance appetite is concentrated in consumer-facing sectors, while loan stress remains steady.
- Finance demand climbed in consumer-facing industries:
- Distribution (+25%)
- Hospitality (+18%)
- Retail (+15%)
- Loans stress steady: 9% of SMEs are unsure if they can meet loan repayments in the next six months.
| Takeaway #4: Listen for clients mentioning rising costs, hiring struggles, or holding off on investment – these are all triggers for finance conversations. |
Where lending opportunities are emerging
Even in a patchy economy, brokers can uncover meaningful opportunities. Demand is strongest in consumer-facing sectors, larger SMEs preparing for big-ticket investments, and businesses under labour pressure turning to technology and training.
1. Working capital for consumer-facing sectors
Consumer-facing industries are leading finance demand as they look for short-term working capital to manage volatility.
- Distribution (+25%), Hospitality (+18%), and Retail (+15%) recorded the sharpest rises in funding needs.
- Drivers include:
- Seasonal sales lulls and cashflow gaps
- Rising living costs weighing on consumer spending
- Inventory disruptions hitting supply chains
- These sectors are high-frequency users of short-term funding – a prime space for brokers to step in with tailored cashflow solutions.
| Takeaway #5: Listen for clients talking about “slow sales months” or “stock delays”—these often mask working capital needs. |
2. Capex revival among larger SMEs
Despite 35% of SMEs signalling growth ambitions, many are holding back on investment due to soft revenue expectations.
- Capital expenditure and marketing budgets both eased in July.
- Smaller SMEs are in “wait and see” mode, delaying upgrades and expansion.
- Larger SMEs are showing renewed capex confidence after a sluggish FY2025 close:
- IT and office upgrades
- New hardware and software
- Machinery and plant purchases
| Takeaway #6: Bigger, established SMEs may be ready for funding conversations around equipment finance and tech upgrades, even while smaller clients delay. |
3. Labour shortages driving innovation
With vacancies falling and wage pressures rising, some SMEs are turning to innovation to maintain productivity.
- Job vacancies slid to 10% in July (lowest in over a year).
- Employers cite shrinking applicant pools and higher wage demands.
- In response, SMEs are:
- Automating processes to offset staffing shortfalls
- Investing in technology to improve efficiency
- Funding staff training to boost capability internally
| Takeaway #7: When clients mention hiring struggles, it’s an opening to discuss finance for automation, digital tools, or training programs that can deliver strong ROI. |
Red flags to listen for in client conversations
Often, SMEs won’t come straight out and say, “I need finance.” Instead, their challenges surface in casual comments during check-ins or loan reviews. For brokers, these are the signals to tune into—because behind every pain point lies a potential funding solution.
When SME clients say…
- “We’re waiting until later in the year to invest.”
→ Suggest staged growth funding aligned to their timeline. - “We’re struggling with delayed customer payments.”
→ Offer short-term working capital for smoother cash flow. - “We can’t find staff, and wages are rising.”
→ Position finance for automation or productivity solutions. - “Our costs keep going up, but sales aren’t growing.”
→ Recommend efficiency improvement funding to protect margins.
| Takeaway #8: Active listening and targeted questioning can uncover unspoken funding needs, turning everyday client frustrations into opportunities for tailored finance. |
How brokers can step up as strategic partners
Brokers are moving beyond the transaction and becoming trusted business partners. The most effective brokers are:
The most effective brokers are:
- Checking in early to prevent small challenges becoming major setbacks.
- Using market insights (like Fifth Quadrant SME Sentiment Tracker) to spark meaningful discussions.
- Structuring loans to match seasonal cycles or staged growth plans.
| Takeaway #9: This proactive, informed approach helps SMEs build resilience and seize opportunities – while strengthening your client relationships and building long-term loyalty. |
The next step
The latest SME data highlights both pressure points and growth opportunities. Now’s the time to act:
- Be proactive and check in with your SME clients.
- Ask targeted questions.
- Position finance as the enabler that turns intentions into outcomes.
Ready to help your clients turn ambition to action? We’re here to support you.
Get in touch or visit our Partner page
Disclaimer: This article references data from the Fifth Quadrant SME Sentiment Tracker (August 2025). While care has been taken to ensure accuracy, OnDeck Australia is not responsible for the completeness or accuracy of third-party information. The information provided is general in nature and does not take into account the specific objectives, financial situation or needs of any individual broker, SME or customer, and should not be relied upon as financial advice.
