Interest rate rise September 2026: what it means for small business

Rates are up again. Here's what it means for your business, and where to look first

On Tuesday 29 September, the Reserve Bank of Australia lifted the cash rate by 0.25 percentage points to 4.60%. It's the fourth rise this year, and the highest the cash rate has been since late 2011.

The next day, the Australian Bureau of Statistics released new inflation figures. Prices rose 4.0% in the year to August, up from 3.5% in July.

If you run a business, you've probably felt both of these already. Here's what's behind them, and what's worth checking now.

Why the RBA moved

The Reserve Bank said inflation remains too high, and some of the risks it flagged in August have started to play out. Global energy prices are much higher than it expected. Its conversations with businesses also show many firms are dealing with rising costs, and are either lifting their prices or planning to.

The inflation figures tell a similar story. Fuel prices jumped sharply in August, partly because of higher world oil prices and the end of the federal fuel excise relief. Electricity costs rose too. New home prices went up as builders passed on higher costs for materials and labour.

For businesses in transport, construction and trades, those pressures will feel very familiar.

What it means for businesses

Most lenders pass on rate rises to variable business loans, overdrafts and some equipment finance. That usually means higher repayments within weeks.

On its own, a quarter of a per cent is manageable for many businesses. The harder part is what it lands on top of. This year, a lot of small businesses have been squeezed from both sides – costs going up, and customers being more careful with what they spend.

That's why we find rate rises are rarely the real problem. More often, they show you where things were already stretched.

Early signs worth paying attention to

Financial pressure tends to build quietly. By the time it feels urgent, it has usually been there for a while. Some early signs we see include:

• Cash getting a little tighter each month, even when sales look steady
• Tax payments or super falling behind, or payment plans being renegotiated
• Paying some suppliers late so you can keep others current
• Using personal money to cover short-term gaps in the business
• A cash flow forecast that only works if things improve

None of these mean your business is in trouble. But if a few of them sound familiar, it's worth taking a closer look now, while you have time to plan.

Three questions to ask yourself this week

If repayments went up again, do you know where that money would come from? If the honest answer is "we'd work it out", it's worth working it out now.

Are you paying some creditors late to keep others happy? It happens in most businesses from time to time. When it becomes routine, your cash flow needs a closer look.

Is there a conversation with your accountant you keep putting off? The conversations we avoid are often the ones that matter most.

If any of these made you wince a little, that discomfort is useful information. It usually means you've noticed early.

What you can do now

Start with your numbers. A simple cash flow forecast for the next three months will show you where the pressure points are, and when they're likely to hit.

Talk to your accountant. They know your business and can help you see the full picture.

If you have business loans, speak to your lender early. Lenders are generally more willing to work with businesses that come to them before repayments are missed.

And if things feel harder to fix than that, get advice sooner rather than later. There are more options available than many business owners realise, including informal arrangements with creditors and formal processes such as Small Business Restructuring. Each has its own eligibility requirements, and the right path depends on your situation. The earlier you look at them, the more choice you usually have.

Talk it through with us

At AVA Advisory, we help business owners understand where they stand and what their options are. If this week's news has you thinking, speak to an advisor. It's a confidential conversation, with no pressure.

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This article is general information only and does not take into account your personal circumstances. It is not financial, legal or tax advice. Please seek professional advice about your specific situation.

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