Millions of small businesses help to support Australia’s economy, providing employment, delivering essential services and contributing hundreds of billions of dollars in economic value each year.
This page brings together the latest data to show how Australia’s small businesses are performing and the trends shaping the sector.
Key Australian business stats: 2026
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2.73 million
Actively trading businesses
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97.3%
Businesses with fewer than 20 employees
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$596 billion
Small business value added
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5.17 million
People employed by small businesses
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59%
Small businesses experiencing cash-flow stress
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12,819
Companies entering external administration
How many small businesses are there in Australia?
- Number of small businesses in Australia: 2,656,469
- Small businesses as a share of all businesses: 97.3%
As of 30 June 2025, there were 2,656,469 small businesses in Australia, representing approximately 97.3% of the country’s 2,729,648 actively trading businesses.
The ABS classifies a small business as a non-employing business or one with fewer than 20 employees.
Non-employing businesses make up the majority of Australia's business population. They accounted for 63.6% of all actively trading businesses in June 2025, while businesses employing one to four people represented a further 25.2%.
Together, these two groups made up almost nine in ten Australian businesses.
The small business population increased by 66,874 overall during 2024–25.
Growth was driven by non-employing businesses, which rose by 71,633, while the number employing 1–4 people fell by 4,688 and those employing 5–19 people declined by 71.
Structure of Australian businesses
Companies were the most common legal structure in June 2025, accounting for 44.2% of actively trading businesses.
Company numbers increased by 4.7% over 2024–25, while sole proprietors rose by 2.4% and trusts by 0.4%. Partnerships fell by 4.3%, continuing a longer-term decline from 231,849 in June 2022 to 204,703 in June 2025.
| Legal structure | Businesses | Proportion of businesses |
|---|---|---|
| Companies | 1,207,814 | 44.2% |
| Sole proprietors | 822,873 | 30.1% |
| Trusts | 493,860 | 18.1% |
| Partnerships | 204,703 | 7.5% |
| Source: ABS, June 2025 | ||
Small businesses by industry
- Industry with largest small business share: Construction (17.2%)
- Strongest small business growth: Health Care and Social Assistance (+6.6%)
Small businesses are found across every part of the Australian economy, but they are heavily concentrated in a relatively small number of industries.
According to ABS data, Construction was home to 456,417 small businesses in June 2025, representing 17.2% of the national total. Professional, Scientific and Technical Services accounted for a further 13.0%, while Rental, Hiring and Real Estate Services represented 11.5%.
Together, these three industries contained 41.7% of all Australian small businesses.
Which industries recorded the strongest growth?
Small business numbers increased across the majority of industries examined, although the fastest-growing industries were not necessarily those with the largest small business populations.
Health Care and Social Assistance recorded the strongest growth in small business numbers over 2024–25, increasing by 6.6%. Construction, while the largest industry by number of small businesses, only had a growth rate of 2.2%, placing it tenth overall.
Retail Trade and Agriculture, Forestry and Fishing were the only industries to record declines, falling by 0.3% and 0.9% respectively.
Small business contribution to the Australian economy
- Value added by small businesses: $595.99 billion
- People employed by small businesses: 5.165 million
In 2023–24, small businesses generated $595.99 billion in industry value added, 32% of the $1.835 trillion generated across the private-sector industries measured by the ABS.
By comparison, medium-sized businesses accounted for 23% of industry value added, while large businesses accounted for 45%.
Employment in small businesses
In 2023–24, small businesses employed approximately 5.165 million people, representing 39% of jobs in the industries covered by the ABS data.
Employment increased by 0.6% among businesses with 0–4 employees but fell by 6.1% among those with 5–19 employees, the only business-size category to record a decline.
Across all small businesses, employment fell by approximately 125,000 people, or 2.4%.
Employment grew more strongly in larger businesses, rising by 6.3% among medium-sized businesses and 6.2% among large businesses.
Where small businesses create the most value
- Agriculture, Forestry and Fishing: 75%
- Rental, Hiring and Real Estate Services: 73%
- Other Services: 54%
- Construction: 51%
Source: ASBFEO
Business entries and exits
- Net increase in actively trading businesses: 66,650
- Largest increase in business numbers: New South Wales (20,040)
- Fastest business growth: Western Australia (4.3%)
Australia saw a net increase of 66,650 actively trading businesses (2.5%) during 2024–25, with 437,150 business entries and 370,500 exits recorded.
While entries remained close to their four-year high, the higher number of exits meant the net increase was less than half the 137,470 recorded in 2021–22 and lower than the 73,125 increase in 2023–24.
Note: Business entries and exits mean more than businesses simply opening and closing. An entry can include a business returning to active trading, while an exit can reflect a sale, restructure, ABN cancellation or a business no longer reporting GST activity.
State and territory growth
Business numbers increased across every state and territory during 2024–25.
NSW recorded the largest numerical increase, adding 20,040 businesses, followed by Victoria with 16,486 and Queensland with 13,579.
Western Australia recorded the fastest proportional growth, with its business population increasing by 4.3%. At the other end of the scale, Tasmania recorded the slowest growth, rising just 0.5%.
Small business cash flow pressures
- Small businesses experiencing cash-flow stress: 59%
- Businesses experiencing late payments: 80%
Cash flow remains one of the biggest operational challenges facing Australian small businesses.
Cash-flow stress occurs when a business does not have enough money available to meet its day-to-day expenses, often because incoming payments are delayed or expenses rise faster than available cash.
A Tyro survey conducted in March 2026 found that 59% of small business owners had experienced cash-flow stress during the previous six months.
Many businesses also had limited financial reserves. Three in ten said they had less than one month of cash reserves, including 10% with no cash buffer at all.
| Cash reserves | Share of small businesses |
|---|---|
| No cash buffer | 10% |
| Some reserves, but less than one month | 20% |
| At least one month of cash reserves | 70% |
| Source: Tyro | |
Late payments continue to strain businesses
Late payments are adding further pressure to businesses already facing higher costs and tight cash flow. A CreditorWatch survey found that 80% of Australian businesses experienced late or overdue payments during the previous 12 months.
Among sole traders and small businesses, 47% used personal funds to support working capital, 26% fell behind on loan, rent or utility payments because customers paid late, and 24% increased debt or delayed paying themselves.
Xero data shows small businesses waited an average of 24.1 days to be paid in the March quarter of 2026, with invoices arriving 6.9 days late on average. The value of invoices more than 60 days overdue also reached its highest level since January 2020 in April 2026.
ATO tax debt and demand for debt support
- Cases handled by the Small Business Debt Helpline: 6,205
- Cases involving ATO debt: 64%
Active ATO tax defaults increased by almost 20% over approximately six months in 2026, rising from around 30,000 to 36,000, according to data from CreditorWatch.
The pressure was concentrated heavily among the smallest businesses. Sole traders accounted for 54% of businesses with reported ATO tax-debt defaults above $100,000, despite representing around 30% of Australian businesses.
Demand for specialist debt assistance has also increased. The Small Business Debt Helpline handled 6,205 cases during 2025, up 21% from the previous year and comes after tax debt changes. ATO debt was involved in 64% of those cases, with more than $429 million in tax debt represented and a median ATO debt of $70,000.
By April 2026, demand for the Helpline was approximately 36% higher than a year earlier, suggesting that financial stress among small business owners was continuing to rise.
For information about personal borrowing, household debt and financial stress, see our Australian credit card and debt statistics page →
Corporate insolvency in Australia
- Companies entering external administration: 14,722
- Increase in companies entering administration: 33.2%
Across companies of all sizes, corporate insolvencies rose sharply through 2024–25. ASIC data show a record 14,722 companies entered external administration for the first time during 2024–25, an increase of 33.2% on 2023–24.
ASIC recorded a further 12,819 companies entering external administration during the first 11 months of 2025–26.
Construction accounted for 24.4% of companies entering external administration during this time, making it the most affected industry. Accommodation and Food Services ranked second at 14.9%.
Note: These figures represent each industry's share of insolvency appointments, not its insolvency rate.
Small Business Restructuring
The Small Business Restructuring (SBR) process allows eligible companies with liabilities of no more than $1 million to remain under the control of their directors while proposing a restructuring plan to creditors.
SBR use has grown rapidly since its introduction. Appointments increased from 448 in 2022–23 to 1,425 in 2023–24, ASIC data shows.
This suggests more eligible businesses are attempting to restructure rather than immediately enter liquidation.
Small business lending in Australia
- Growth in outstanding SME lending: 6.5%
- Average rate on outstanding small business loans: 7.39% p.a.
- Small businesses reported difficulty accessing credit: 50%
- New fixed-term loan commitments: $12.58 billion
Outstanding lending to small and medium-sized enterprises (SMEs) grew by approximately 6.5% over the year to mid-2025, according to the RBA. However, growth was concentrated in larger SME loans, while smaller loans increased by around 3.5%.
Note: For this analysis, the RBA defines SMEs as businesses with annual revenue below $75 million. Smaller SME loans are those where the lender’s total exposure is below $1.5 million.
Small businesses pay higher interest rates
In May 2026, the average interest rate on outstanding small business loans was 7.39% p.a., compared with 6.08% for medium businesses and 5.64% for large businesses.
Rates on new small business loans averaged 7.26% p.a., around 1.77 percentage points higher than the average rate for large businesses.
| Business size | Outstanding loans | New loans |
|---|---|---|
| Small business | 7.39% | 7.26% |
| Medium business | 6.08% | 6.12% |
| Large business | 5.64% | 5.49% |
| Source: RBA, May 2026 | ||
Access to finance remains difficult for some businesses
Half of small businesses and 41% of sole traders reported difficulty accessing credit in a CreditorWatch survey published in October 2025.
High interest rates were the most common barrier, followed by complex application processes and collateral requirements.
These barriers can make it harder for smaller businesses to secure funding for equipment, working capital or expansion, particularly when they have limited assets, shorter trading histories or uneven cash flow.
What are businesses borrowing for?
Small businesses entered into $12.58 billion in new fixed-term loan commitments during the March quarter of 2026, excluding refinancing, according to ABS data. This was 4.3% higher than a year earlier.
Property purchases accounted for the largest value at $5.26 billion, while plant and equipment finance recorded the fastest growth, increasing 36.9% to $670.1 million.
Overall, lending for property purchases, construction, plant and equipment, and working capital increased by between 4.0% and 36.9%. General business lending fell 4.1%, while lending for acquisitions declined 10.7%.
Looking to finance your small business?
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Small business sentiment and challenges
- Small business sales growth: 7.2%
- Businesses reporting lower profits: 64%
Xero data shows small business sales increased 7.2% over the year to the March quarter of 2026, while employment grew 3.4%.
However, stronger sales and employment do not necessarily translate into higher profits.
The 2025 COSBOA Small Business Perspectives Report found that 64% of surveyed businesses recorded lower profits than a year earlier, while 72% identified rising costs as their biggest barrier to growth.
The pressure also affected owners personally. Six in ten said they had been unable to pay themselves at least occasionally, 25% regularly used personal savings to support their business, 76% reported stress or anxiety and 57% experienced burnout.
Sentiment was not entirely negative. Almost half of surveyed owners expected customer demand to improve over the following 12 months, while 63% remained satisfied with their decision to start a business.
- Actively trading businesses: 2,729,648
Source: ABS, at 30 June 2025 - Small businesses with fewer than 20 employees: 2,656,469
Source: calculated from ABS employment-size data, at 30 June 2025 - Small businesses as a share of actively trading businesses: 97.3%
Source: calculated from ABS employment-size data, at 30 June 2025 - Business entries: 437,150
Source: ABS, FY2024–25 - Business exits: 370,500
Source: ABS, FY2024–25 - Net increase in actively trading businesses: 66,650, or 2.5%
Source: ABS, FY2024–25 - Largest industry by number of small businesses: Construction, with 456,417 businesses (17.2% of small businesses)
Source: ABS, at 30 June 2025 - Fastest-growing small business industry: Health Care and Social Assistance, up 6.6%
Source: calculated from ABS industry and employment-size data, FY2024–25 - Companies entering external administration: 14,722, up 33.2%
Source: ASIC, FY2024–25
The headline business counts, entries, exits and net change are published directly by the ABS. The small-business totals and industry figures are calculated from the downloadable ABS employment-size data.
- Actively trading businesses: 2,662,998
Source: ABS, at 30 June 2024 - Small businesses with fewer than 20 employees: 2,589,595
Source: calculated from ABS employment-size data, at 30 June 2024 - Small businesses as a share of actively trading businesses: 97.2%
Source: calculated from ABS employment-size data, at 30 June 2024 - Business entries: 436,018
Source: ABS, FY2023–24 - Business exits: 362,893
Source: ABS, FY2023–24 - Net increase in actively trading businesses: 73,125, or 2.8%
Source: ABS, FY2023–24 - Largest industry by number of small businesses: Construction, with 446,362 small businesses
Source: calculated from ABS industry and employment-size data, at 30 June 2024 - Companies entering external administration: 11,053, up 39.2% from 2022–23
Source: ASIC, FY2023–24
The headline business counts, entries, exits and net change are published directly by the ABS. The small-business totals and industry figures are calculated from the downloadable ABS employment-size data.
- Actively trading businesses: 2,589,873
Source: ABS, at 30 June 2023 - Small businesses with fewer than 20 employees: 2,520,419
Source: calculated from ABS employment-size data, at 30 June 2023 - Small businesses as a share of actively trading businesses: 97.3%
Source: calculated from ABS employment-size data, at 30 June 2023 - Business entries: 406,365
Source: ABS, FY2022–23 - Business exits: 356,216
Source: ABS, FY2022–23 - Net increase in actively trading businesses: 50,149, or 2.0%
Source: ABS, FY2022–23 - Largest industry by number of small businesses: Construction, with 438,236 businesses
Source: calculated from the ABS industry-class and employment-size data cube, at 30 June 2023 - Companies entering external administration: 7,942, up 61.7% from 2021–22
Source: ASIC, FY2022–23
The headline business counts, entries, exits and net change are published directly by the ABS. The small-business totals and industry figures are calculated from the downloadable ABS employment-size data.
- Actively trading businesses: 2,539,724
This figure is calculated from the ABS’s revised historical series. The ABS recorded 2,589,873 actively trading businesses at 30 June 2023, following a net increase of 50,149 during 2022–23.Source: calculated from revised ABS data, at 30 June 2022
- Business entries: 442,555
Source: revised ABS data, FY2021–22 - Business exits: 305,085
Source: revised ABS data, FY2021–22 - Net increase in actively trading businesses: 137,470
Source: revised ABS data, FY2021–22 - Companies entering external administration: 4,912
Source: ASIC, FY2021–22
Note on revised ABS figures
The ABS originally reported 2,569,900 actively trading businesses at 30 June 2022, with 472,731 business entries and a net increase of 167,646 during 2021–22.
These figures were subsequently revised after the ABS identified that a large number of businesses had been incorrectly treated as entries during the September 2021 quarter. The revised series records 442,555 entries and a net increase of 137,470 for 2021–22.
The revised figures have been used above so this snapshot remains consistent with later ABS releases.
- Actively trading businesses: 2,402,254
Source: ABS, at 30 June 2021 - Small businesses with fewer than 20 employees: 2,340,305
Source: calculated from ABS employment-size data, at 30 June 2021 - Small businesses as a share of actively trading businesses: 97.4%
Source: calculated from ABS employment-size data, at 30 June 2021 - Business entries: 365,480
Source: ABS, FY2020–21 - Business exits: 277,674
Source: ABS, FY2020–21 - Net increase in actively trading businesses: 87,806, or 3.8%
Source: ABS, FY2020–21 - Companies entering external administration: 4,235
Source: ASIC, FY2020–21
Note: The ABS used an experimental point-in-time employment indicator for its 2020–21 employment-size figures due to the effects of COVID-19, so these figures may not be directly comparable with later years.
The headline business counts, entries, exits and net change are published directly by the ABS. The small-business totals and industry figures are calculated from the downloadable ABS employment-size data.
