Signs of financial distress are growing among Australian businesses, according to Equifax Australia’s Q1 2025 Commercial Insights Report. The data reveals 3,393 business insolvencies in the first quarter — a 28% increase compared to 2024 and more than double the number recorded in 2022.
The construction, hospitality, and retail sectors remain the most affected, facing falling credit demand and mounting financial strain. Nearly 90% of the businesses that failed had already been flagged as high risk, suggesting that early warning signs were widely missed..
While overall commercial credit demand rose by 1.6%, SMEs cut back borrowing by more than 8%, signalling growing caution. Tax defaults also surged, with over 30,000 entities owing nearly AUD 9.5 billion to the ATO.
Equifax warns that credit risk monitoring is now more critical than ever, particularly for smaller and more vulnerable businesses.
