Interest Rates Didn’t Rise — So Why Should Business Owners Still Be Concerned?
Written by: Melissa Cunliffe (CA)
The RBA has left interest rates unchanged at 4.35% — but does that really mean Australian family businesses can relax?
Not yet.
The Reserve Bank of Australia held the cash rate at 4.35% on 11 August 2026, following three rate increases earlier this year. The decision provides some welcome breathing room, but the message accompanying it was considerably less comfortable.
The RBA remains concerned about inflation, considered increasing rates at the meeting, and has made it clear that another increase remains possible if inflation doesn’t continue moving in the right direction.
For small and family businesses, the important question therefore isn’t:
“When will interest rates come down?”
It’s:
“Can our business remain profitable and cash-flow positive if rates stay higher for longer — or rise again?”
A rate hold isn’t a rate cut
When the RBA leaves rates unchanged, it’s easy to interpret the announcement as good news. But nothing actually became cheaper.
If your business has:
commercial-property debt;
equipment finance;
vehicle loans;
an overdraft;
working-capital facilities; or
variable-rate business borrowings,
those financing costs haven’t disappeared.
And for businesses selling to households, there’s another consideration. Your customers may also have mortgages, car loans and other debt. Higher interest costs reduce the amount of money households have available to spend elsewhere.
That creates pressure from both directions:
Your business costs more to finance while some of your customers have less money to spend.
Stop building your business plan around the next rate cut
One of the biggest mistakes a business can make is budgeting around something it doesn’t control.
You don’t control the RBA.
You don’t control inflation.
And you don’t control when rates eventually fall.
So rather than asking:
“When will rates come down?”
Ask:
“What happens to our business if they don’t?”
That’s a much more useful question.
Run the numbers
Imagine a family business carrying $2 million of variable debt.
An additional 0.25 percentage points in interest costs represents approximately another $5,000 per year, before allowing for the exact facility terms and timing. A full percentage point represents approximately $20,000 annually. That money has to come from somewhere.
Either:
sales increase;
margins improve;
costs decrease;
productivity improves; or
profit and cash flow absorb it.
This is why interest rates aren’t merely an economic story.
They’re a business margin story.
Look beyond the loan repayment
Higher rates can affect a business in several ways at once.
Customers
Households with larger repayments may reduce discretionary spending.
Debtors
Customers experiencing their own cash-flow pressure may take longer to pay you.
Property
Commercial and investment-property decisions become more sensitive to financing costs.
Equipment
New machinery, vehicles and technology have to generate a greater return to justify borrowing.
Working capital
Businesses relying on overdrafts to fund stock, wages or debtors pay more simply to operate.
The impact therefore goes considerably further than the monthly bank repayment.
Preserve. Protect. Prosper.
At 3P’s Future Accounting, we look at changing economic conditions through our 3P’s Future Prosperity Model.
PRESERVE
Preserve the wealth you’ve already created.
A business shouldn’t have to continually inject personal savings or increase debt simply to fund normal operations.
Ask:
Is the business generating enough cash to fund itself after tax, debt repayments and necessary capital expenditure?
If it isn’t, understanding why should become a priority.
PROTECT
Protect the business against what you can’t control. Stress-test debt. Review your break-even point. Maintain appropriate cash reserves. Know exactly how much interest your business is paying. And don’t assume today’s rate will be tomorrow’s rate.
PROSPER
Prosperity isn’t simply surviving higher interest rates. It’s building a business capable of growing despite them.
That means reviewing:
pricing;
margins;
debt structure;
productivity;
unnecessary costs;
return on assets;
capital expenditure; and
customer profitability.
Sometimes the best financial decision isn’t borrowing more. Sometimes it’s making the assets and resources you already have work harder.
Five questions to ask before the next RBA meeting
Don’t wait for another interest-rate headline.
Ask these questions now:
How much interest will our business pay over the next 12 months?
What happens to cash flow if rates rise another 0.25% or 0.50%?
Are we recovering increased finance costs through our pricing and margins?
Which loans or facilities should be reviewed or renegotiated?
Could the business continue meeting tax, payroll and debt obligations if sales fell 10%?
If you don’t know the answers, your business may be carrying more interest-rate risk than you realise.
The 3P’s view
The RBA holding rates is welcome. But a pause shouldn’t create complacency. The RBA has made clear that inflation remains a concern and further increases remain possible. Strong family businesses don’t attempt to predict every economic decision. They prepare for different outcomes.
At 3P’s Future Accounting, our focus is helping business owners understand what changing economic conditions mean for their numbers, their family and their future. Don’t build your strategy around hoping rates come down. Build a business capable of succeeding if they don’t.
Preserve. Protect. Prosper.
Let’s stress-test your numbers and build a strategy that helps you Preserve. Protect. Prosper. Talk to us today.
Disclaimer
This article does not constitute financial advice and is for general information only. It does not take into account any individual’s personal objectives, situation or needs, and is not intended as professional advice. Any similarity to an individual’s personal circumstances and the examples provided in this article is purely coincidental. Any person acting upon such information without receiving specific advice, does so entirely at their own risk.
Authorisation under an Australian Financial Services Licence (AFSL) is not required in the provision of this article and the author plus Future Accounting Group Pty Ltd is not acting in its capacity as an Australian Financial Services Licence holder
Liability limited by a scheme approved under professional standards legislation.
