The RBA just lifted rates to 4.60%. What it means for your business

What did the RBA decide on 29 September 2026?

The Reserve Bank raised the cash rate target from 4.35% to 4.60%, because inflation is still too high and energy prices have risen further than it expected in August. In its statement, the Board said the conflict in the Middle East has pushed global energy prices “much higher than had been assumed”, and that higher fuel costs are already flowing into the price of other goods and services.

It’s the fourth increase of 2026, after February, March and May. The cash rate started the year at 3.60%. The Board also left the door open to more, saying it will do what it considers necessary, “including increasing the cash rate target further if needed”.

How much does a rate rise add to a business loan?

On a variable facility, each 0.25% rise adds about $250 a year in interest for every $100,000 owed. Across all four rises this year, that’s about $1,000 a year per $100,000.

Approximate extra interest on the amount owed, assuming the full rise passes through to a variable rate. A loan you’re paying down costs a little less as the balance falls. Figures are indicative only and your rate depends on the lender’s assessment.

Rates for new business borrowing were already rising before this decision. The RBA’s business lending data shows new variable-rate loans to small businesses averaged 6.41% p.a. in January 2026 and 7.07% in July, the latest month published. New fixed-rate loans went from 7.31% to 8.11% over the same months. Neither figure includes this rise yet.

Use the business loan calculator to run your own balance and term at a higher rate.

Which business finance moves with the cash rate, and which doesn’t?

Variable facilities usually reprice soon after an RBA move, while fixed-rate loans and fee-based products don’t change until you refinance or take out a new one. Knowing which of your facilities sits in which group tells you where the rise lands.

• MovesOverdrafts, lines of credit and variable term loans. These are priced off a variable rate, so the rise flows straight through. An overdraft only charges interest on what you’ve drawn, so the cost depends on how much of the limit you use.
• FixedFixed-rate term loans and most chattel mortgages. Your repayment stays the same until the fixed term ends. The next loan is where you’ll feel it, because new fixed rates have already risen. A chattel mortgage on a vehicle or machine you already own is usually in this group.
• Fee-basedMerchant cash advances and revenue-based lending. These are priced as a fixed fee on the amount advanced, not an interest rate, so an advance you already have won’t change. New advances are priced by the provider, not set by the RBA.
• CheckInvoice and trade finance. Pricing varies by lender. Many facilities include a variable component, so check your agreement before you assume either way.

If you’re unsure which rate you’re on, your loan agreement or your lender’s last rate notice will say. We can read it with you.

How does a rate rise reach your customers?

A rate rise hits your customers’ budgets as well as yours, so it tends to show up in your sales and your debtors before it shows up in your loan statement. The RBA’s own statement points to both sides.

Customers who buy from you as households. The Board said growth in consumer spending is easing, housing prices have fallen in most capital cities and new housing loans have declined noticeably. Every mortgage rate rise leaves households with less to spend. Cafés, retailers, online stores and home improvement trades usually feel that first.

Customers who are businesses. Your business customers face the same higher costs you do. When their cash gets tight, the easiest bill to delay is often yours. Payment times were already stretched before this rise: the Payment Times Reporting Regulator found it takes about 55 days for 95% of small business invoices to be paid, against agreed terms of 29 days. Our piece on late-paying customers covers what that gap costs and how to close it.

Your own prices. The RBA also noted that firms are raising their prices or looking to. Passing on higher costs protects your margin, but only if customers stay. Model a price rise against the customers you could lose before you commit to it.

What does it mean for your industry?

The same 0.25% lands differently depending on how your revenue arrives and what else is already squeezing your margin. Here’s how it plays out in the industries we work with most.

Hospitality and retail

Hospitality was already absorbing the Fair Work Commission’s 4.75% award wage increase from 1 July 2026. Now customers have less to spend and variable facilities cost more at the same time. Equipment you’ve already leased on a fixed rate won’t change. An overdraft that covers the quiet weeks will. See finance for hospitality and retail and why most hospitality equipment gets leased.

Trades and construction

Residential builders and trades feel a rate rise twice: through their own facilities, and through fewer new housing loans, which the RBA says have already declined noticeably. Construction also had more external administrators’ reports than any other industry in 2023-24, so lenders read this sector cautiously when rates rise. A fixed-price contract can’t pass on a higher finance cost halfway through, so price the next one with today’s rates in mind. More in finance for trades and construction and why lenders care about your next contract.

Transport and logistics

The RBA says global oil supply disruptions are keeping upward pressure on fuel prices. Add a higher rate to clients who pay on 30 to 90 day terms, and waiting to be paid now costs more on both counts. Truck finance written on a fixed rate won’t move, but the overdraft or invoice finance that funds the wait will. See finance for transport and logistics and the document that speeds up an application.

Ecommerce

Most online stores fund growth with revenue-based lending, which is priced as a fixed fee, so an advance you already hold won’t change. What changes is demand: discretionary spending is usually the first to soften when mortgages cost more, and the Christmas stock order still has to be paid for months before it sells. Read funding Christmas stock and when to move off revenue-based lending.

Wholesale and trade

Wholesalers fund both ends of the cycle: paying suppliers up front, then waiting on customers who are now under more pressure themselves. Every extra day between the two costs more at 4.60% than it did at 3.60%. Covering both ends with the right structure matters more now. See how trade finance and invoice finance fund both ends.

Professional services

Firms that carry work in progress and debtors feel the rise through the gap between doing the work and being paid for it, and that gap now costs more to fund. Recurring fees give a lender more to rely on than one-off projects. How that reads to a lender is covered in why an accountant’s cash flow looks nothing like a law firm’s.

What about tax debt?

ATO debt gets dearer when rates rise too. The general interest charge is set each quarter from bank bill yields, and the ATO’s published rate for October to December 2026 is 11.51% a year, up from 10.61% for the same quarter of 2025.

Since 1 July 2025 that charge is also no longer tax deductible, while interest on a business loan usually is. If you’re carrying a payment plan, compare the two after tax. Your accountant can tell you what the deduction is worth to you.

Will rates rise again?

Nobody can say exactly when, and we won’t pretend to. The RBA has said it will keep increasing the cash rate if it needs to, so plan for another rise rather than hoping for a cut.

If this year has taught us anything, it’s that the Board may skip a meeting, but it hasn’t changed direction: it held in June and August, then went up again. Our read is that the cost of doing business keeps rising through this cycle, and we don’t think we’re out of the woods yet.

Relief does come, but it’s targeted and temporary. When fuel prices spiked earlier this year, the government halved fuel excise from April to June, and the ATO’s excise table shows it back at the full rate from 3 August. For a transport business that helped, but it wasn’t something to build a budget around.

The costs that follow a rate rise also arrive in stages. Your own loans and mortgage move first. Your rent can follow at the next review, if your landlord’s mortgage has gone up too, and possibly by more than you’re used to. If your budget only works at today’s rate, it’s already tight.

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