How the RBA rate rise will impact your business and 7 things you can do to better your position

The RBA has now delivered four rate hikes in 2026, with the most recent 25 basis point increase taking the cash rate to 4.6% its highest level in 15 years. Here's what it means for your businesses and what you can do about it.

The Key Impacts

1. The ‘Double Squeeze’

The decision hits small business owners hard, compounding the impact of previous rate hikes that have already dampened sales. Many small businesses will face a double squeeze, as consumer spending power depresses and their own debt repayments potentially increase simultaneously.

2. Higher Borrowing Costs

Higher interest rates affect small businesses in two main ways. First, they increase the cost of debt. If your business has a variable rate loan, equipment finance, overdraft, commercial property loan, credit card balance or business line of credit, your repayments may increase. Even if your facility does not change immediately, refinancing or new borrowing can become more expensive.

3. Squeezed Margins from Multiple Directions

Higher interest rates, higher fuel costs, higher supplier costs and cautious consumers can all affect small business performance. Some businesses will feel it through loan repayments. Others will feel it through reduced customer demand, tighter margins or slower payments.

4. Rising Input Costs

Inflation is not only coming from strong customer demand. It is also coming from the cost side of the economy, including fuel, transport, energy, rent, wages, imports and finance costs.

5. Business Confidence & Hiring

The most immediate consequence of rising rates is the effect on business confidence and hiring decisions. SME behaviour is clear and worsening today's rate hike will push Australian businesses further into a defensive footing.

6. Payday Super Adding to the Burden

Small business owners are already managing fuel cost surges, rising input prices, Payday Super obligations, and customers whose household budgets are under sustained pressure.

✅ What Small Businesses Can Do

Here's a practical action plan to strengthen your position:

1. Audit all variable-rate debt

Businesses carrying variable-rate debt face real cost increases. Run the numbers on what further increases would do to your repayments and covenants now, rather than being caught out.

2. Review pricing strategically

Any price increase should be based on actual costs, margins, customer demand and competitive positioning.

3. Tighten cash flow monitoring

Small business owners need to closely monitor and plan for tighter profit margins and any cash flow pinch points in the months ahead.

4. Forecast regularly

Regular forecasting becomes increasingly important during uncertain conditions

5. Review lending arrangements

Many businesses only review lending arrangements during periods of stress. Regular reviews can identify opportunities earlier.

6. Engage your accountant

An accountant can help review margins, cash flow, tax planning, business structure, debt exposure, budgeting and financial reporting.

7. Plan ahead on tax

With higher rates, inflation and cash flow pressure, tax planning before 30 June can help business owners understand their likely tax position and prepare more effectively

If you have any questions or need help please reach out to me paul@congdonfuzi.com.au