Here’s one for the “of course we are” pile: sole traders and micro-businesses are officially behind the boom in business loan applications in Australia, according to new research from Money.com.au.
With rising costs, patchy cash flow and traditional lenders tightening the purse strings, it’s the smallest businesses doing the heavy lifting when it comes to funding their hustle.
Money.com.au crunched the numbers on more than 15,000 business loan requests made through its platform since the start of 2024 – and guess what? A whopping 91 per cent came from solo operators and micro-businesses. That’s tradies, café owners, graphic designers, consultants, hairdressers, dog groomers – you name it. The battlers keeping the economy buzzing are also the ones most in need of a financial lifeline.
According to the data, two in five of those loan applications were from sole traders turning over just under 15 grand a month. Meanwhile, another big chunk – around half – came from micro-businesses with fewer than 10 staff and an average monthly turnover closer to 30K. Larger businesses barely made a blip, with just six per cent of loan applications coming from companies with more than 10 employees. Why? Big business usually has a cushy line of credit with the bank. Small biz? Not so much.
Why small businesses are borrowing big
Phil Collard, Business Finance Expert at Money.com.au, says it’s clear that the little guys are under the pump – and they’re turning to short-term finance to stay afloat.
“Sole traders and micro-businesses often fall through the cracks of traditional lending, yet they’re the ones most actively seeking funding,” says Collard. “They’re the ones juggling payroll, overheads, suppliers and trying to grow – often all at once – without much of a safety net.”
And if you work in hospitality or the trades, Phil reckons you’ll know this pain all too well. Late invoices or delayed payments from a bigger player can throw a serious spanner in the works.
“In these industries, smaller operators are often at the mercy of main contractors or suppliers. If the cash doesn’t come in on time, they have to scramble to cover wages or keep the lights on. That’s where short-term loans can be a lifesaver,” says Collard.
Record business closures spark loan surge
Loan requests on the platform have surged 48 per cent in the past year. Nearly 50 per cent more small business owners are seeking finance compared to last year. At the same time, ABS stats show a record number of Aussie businesses shut up shop in 2024 – more than 443,000 businesses were deregistered, the highest number we’ve ever seen. Ouch.
Collard says it’s a combination of squeezed profit margins, high interest rates and tougher lending conditions that’s pushing business owners to explore alternative options.
“Running a small business has never been more expensive,” he says. “Costs are climbing, banks are stricter, and every dollar of profit is harder to hang on to. That’s why more and more soloists and small business owners are looking to fintech lenders – they’re faster, more flexible, and often have criteria that better match how modern businesses actually operate.”
What you can do if cash flow’s causing headaches
So, what does this mean if you’re a sole trader or running a tiny team?
There are more options than you might think. Do your research and compare lenders to make sure you choose the right loan to suit your business.
If you’re sick of chasing payments or waiting weeks for invoices to clear, you could also consider changing your payment terms, setting up invoice aitomation (standard in most accounting solutions, these days) or maybe even look at invoice financing to ease your cash flow bumps.
Borrowing money to grow or survive isn’t always ideal, however, it’s becoming a reality for a lot of small businesses, so always do your due diligence to make sure you get the solution that’s right for your business circumstances.
Source: Flying Solo July 2025
This article by Cec Busby is reproduced with the permission of Flying Solo – Australia’s micro business community. Find out more and join over 100K others https://www.flyingsolo.com.au/join.
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