Small construction firms are asking for more credit, yet they are buying less kit. That mismatch is the most useful detail in the latest credit-bureau data for anyone who cares about how many homes actually get built.
Equifax’s September 2026 figures show enquiries from construction SMEs up 13.6% on a year earlier. Equipment finance applications from the same group fell 1.6%. A business planning to grow tends to borrow for machines, vehicles and fit-out. A business borrowing without buying assets is usually covering something else: wages, materials, or the gap between sending an invoice and getting paid.
Borrowing without buying
The pattern is not unique to building. Across all small and medium firms, enquiries rose 14% year on year, while large firms moved the other way, down 11.4%. Total enquiries grew 10.1%.
For construction, though, the mix matters more than the headline. Production industries as a group, which covers construction, manufacturing, mining and transport, lifted enquiries 10.8%. Construction sat above that average. Yet asset finance across all businesses was still 3.2% below last year, even though that gap was much smaller than August’s 12.7% shortfall.
Put simply, more tradies and small builders want a credit line, and fewer want to commit to new machinery. That reads as defensive borrowing.
Slower payers, tighter squeeze
The payment data helps explain why. In August, 90.2% of invoices were paid on time, unchanged from July. But invoices one to 30 days overdue climbed from 6% to 7.9%.
That is a small slip in lateness, not a collapse. It still matters in a trade where margins are thin and progress payments set the pace. A builder who waits an extra week or two for a client’s cheque still has to pay subcontractors and suppliers on schedule. Short-term credit fills that hole.
The lag also travels down the chain. A developer who stretches payment to the head contractor puts pressure on the subcontractor, who then borrows. By the time it shows up as an enquiry, the strain is already a few links removed from the project that caused it.
Why this matters for housing supply
This is the angle a lending-focused read tends to miss. Construction businesses sit at the sharp end of the supply pipeline. When they are stretched, approved projects slow, trades walk away from fixed-price jobs, and some operators fail. Our housing supply, approvals and building costs guide lays out why approvals alone never guarantee completions.
The pressure is also showing up upstream. Developers face the same tight conditions, as we covered in Brisbane development finance tightens as luxe tower costs bite. When project finance is hard to get and the small contractors doing the work are leaning on credit just to keep going, delays and cancellations become more likely.
Key numbers
- Construction SME enquiries: up 13.6% year on year
- Construction equipment finance applications: down 1.6%
- Invoices 1-30 days overdue: 7.9%, up from 6%
- Business confidence in a bank survey: minus 13, down four points
The cash rate adds another layer
The central bank lifted its benchmark rate to 4.6% in the same period. Higher rates raise the cost of the very working-capital lines these firms are reaching for. They also squeeze clients, which feeds back into slower payment. It is a loop, not a one-off.
A separate survey found 26.9% of respondents saw the coming year as a good time to invest, against 49% who called it a bad one. Firms that do not want to invest in new assets are not irrational. They are protecting liquidity.
What could change the read
Two things complicate a gloomy reading. First, an industry executive suggested the drop in large-firm enquiries may reflect an unusually busy August and some lenders growing more cautious, so one month does not set a trend. Second, rising enquiries are not rising defaults. Many of these firms will get credit, pay it back and carry on.
Large transport and logistics firms also lifted enquiries 33.2% while asset finance applications dropped 16.6%, which shows the same borrow-without-buying pattern outside construction. That makes it a broader cash-flow story, not a building-only one.
What readers can do
If you are building or renovating, ask your builder how progress payments are structured and whether the contract is fixed-price. Fixed-price jobs leave the contractor holding the cost risk when finance tightens. If you are a developer or investor with a project in the pipeline, build in time and cost buffers, because delays often start with a contractor’s cash flow, not with the council.
Watch the overdue-invoice figure next month. If it keeps rising while construction enquiries stay elevated, expect more stress to reach project timelines. Subscribe to the Australian Property Review newsletter for the weekly signal.
General info, not financial advice.
