How to respond to higher rates | New tax relief arrives | Business failures rise
Four rate rises in 2026 have already made borrowing more expensive – and with further increases still possible, every dollar of debt deserves a closer look.
With underlying inflation remaining stubbornly above the Reserve Bank's 2–3% target range, and with two more interest rate decisions remaining in 2026, it's possible the central bank might hike again before the end of the year.
That uncertainty matters for businesses because higher rates can affect more than the repayment on a single loan.
Equipment finance, commercial property loans and other variable-rate debts can all compete with wages, stock and other everyday expenses for available cash.
Make existing debt work harder
Rather than trying to pick the RBA’s next move, businesses can use the current uncertainty as a reason to review their debt.
Three questions worth asking:
Are existing facilities still competitive?
Could repayments be structured differently?
Are multiple debts making cash flow harder to manage?
Changing finance won’t always make sense, particularly once fees and other costs are considered.
But if higher rates have changed what existing debt is costing the business, a broker can compare the current structure with other options in the market.
A difficult year doesn’t necessarily erase the value of profits earned earlier – eligible companies can now use past tax payments to help absorb a current loss.
The federal government has reintroduced loss carry-back for tax years starting on or after 1 July 2026.
In simple terms, an eligible company that makes a tax loss can offset that loss against tax paid up to two years earlier, potentially generating a refundable tax offset.
The measure is expected to benefit up to 85,000 companies each year, most of them small businesses.
Another tax change for small businesses
The government has also made the $20,000 instant asset write-off permanent.
Small businesses with turnover below $10 million can immediately deduct eligible assets costing less than $20,000, with the threshold applying per asset.
That could give eligible businesses more certainty when planning equipment purchases, rather than waiting to see whether the write-off will be extended each year.
Businesses should speak to their accountant about the tax implications. If an equipment purchase or temporary cash-flow squeeze also creates a funding need, a broker can help explore suitable finance options.
The sharp rise in insolvencies shows just how little margin for error many businesses have when costs are high and growth is weak.
Australian Industry Group says business failures have been rising much faster than the business population itself. Over the past decade, insolvencies have grown at three times the rate of the number of Australian businesses.
The employer association points to a difficult combination of weak economic growth and high inflation. Meanwhile, ASIC recorded 14,004 corporate insolvencies in the year to July 2026.
Creating more breathing room
That doesn’t mean trouble is necessarily around the corner. Tougher conditions can, however, expose financial weaknesses more quickly.
Healthy cash reserves, manageable debt repayments and access to working capital can provide greater flexibility if sales slow or unexpected expenses arrive.
Finance shouldn’t be used to disguise deeper problems. But businesses with sound fundamentals may benefit from reviewing their funding before cash flow becomes stretched.
If existing repayments are putting pressure on cash flow or extra working capital could provide more flexibility, a broker can help explore suitable finance options.
Cyber security isn’t only about software and systems – the people using them every day can also play an important role in protecting the business.
Employee cyber training is now attracting attention in Canberra. A federal parliamentary inquiry is examining the role good cyber security practices among staff can play in protecting small and medium-sized businesses, as well as whether SMEs can easily access appropriate guidance, services and standards.
Cyber security goes beyond IT
For business owners, the inquiry highlights an important point: cyber security shouldn’t sit solely with an IT provider.
Employees also need to understand the role they play in keeping systems and information secure. Building cyber awareness into everyday business practices can help make security a shared responsibility.
Strengthening cyber security may involve more than staff training. A review of the business’s cyber preparedness could also identify a need to invest in new technology, systems or external expertise.
If those improvements require significant upfront spending, a broker can help explore finance options that allow the business to invest while preserving working capital.
Rates, tax rules and business risks are all shifting at once. Staying ahead can make the next decision easier – so if your funding needs are changing, get in touch to explore your options.