SME Growth Index September 2025: Insights into Australia’s SME Landscape

The latest ScotPac SME Growth Index reveals a business environment that is optimistic but facing real headwinds. While 59% of Australian SMEs forecast revenue growth (up from 53% last year), 25% anticipate contraction, triple the rate from 2014.

📈 Key Findings

• 59% of SMEs expect revenue growth in the next 6 months, averaging a record 10.1%.
• 25% of SMEs are in outright contraction, triple the rate from 2014.
• 55% plan to fund new investment via non-bank lenders, double the rate using banks.
• 82% cite wage inflation as their top cost concern; electricity costs have surged 51% in 18 months.
• 65% have been affected by natural disasters, yet 26% have no preparation in place.
• 72% have frozen hiring to mitigate insolvency risk.

🔍 Sector & Regional Insights

• Mining (81%) and Business Services (73%) are the most optimistic sectors.
• Victoria lags behind, with only 28% of SMEs forecasting growth.
• Western Australia (91%) and Queensland (84%) lead in positive sentiment.

💰 Funding Trends

• SMEs increasingly rely on retained earnings (89%) and family finance (32%), which may limit growth.
• Bank borrowing continues to decline, now at 27%, nearing historic lows.

⚠️ Tax & Regulatory Pressures

• Many SMEs are unaware of key tax changes:
  • 62% of small SMEs don’t know ATO debt interest is no longer deductible.
  • 55% are unaware of the extended $20,000 Instant Asset Write-Off.

🌪️ Disaster Risk & Resilience

• Natural disasters are now a mainstream risk.
• SMEs most often turn to primary lenders (33%) and suppliers (32%) for recovery advice.

🔧 Productivity Challenges

• SMEs face systemic constraints:
  • Rising wages (21%)
  • Hiring delays (16%)
  • Lack of innovation (9%)
• Productivity levels are 50% lower than larger firms.

🧭 Strategic Implications

• SMEs are navigating a landscape of growth potential vs. structural headwinds.
• Brokers, lenders, and government policy play a critical role in enabling resilience and expansion.

💡 The takeaway? SMEs are resilient, but need sharper tools, better policy awareness, and stronger support networks to thrive. To read the full report visit https://www.scotpac.com.au/wp-content/uploads/2025/09/SME-Growth-Index-Round-23-September-2025.pdf