Money has become more expensive lately. The Reserve Bank of Australia raised the cash rate three times between February and May 2026, from 3.6% to 4.35%, then held it at the following two meetings while it waits for inflation to come down. It hasn’t ruled out further rises, and the RBA doesn’t expect inflation back around the midpoint of its target band until late 2027.

For your business, waiting for cheaper borrowing means waiting without knowing for how long. In the meantime your facilities have repriced, approval takes more work than it did, and your customers are slower to pay than they were. While you can’t move the cash rate, you still have control over your current and future borrowing, starting with the facilities you’re already paying for.

Higher rates hit each of your facilities differently

Your lender is a borrower too. When the cash rate rises, its own cost of borrowing goes up, and what you’re charged moves up to match. Facilities written on a variable rate pass rising rates straight through, which covers overdrafts, business credit cards, variable term loans and a good deal of equipment finance. A fixed-rate loan holds the repayment you agreed for the length of the term, so a rate rise after settlement doesn’t reach it.

To know where you’re exposed:

  1. List every facility your business holds and mark each one fixed or variable.
  2. Put the expiry or review date beside each one. A fixed rate that ends soon gets rewritten at whatever the market is charging then, so each date is a chance to decide before the decision is made for you.
  3. Rank them by what they cost you. The one at the top is often an overdraft that has repriced quietly along the way, while the loan you took out to clear it has held its rate.
  4. Spare cash goes furthest against that one, so it’s the first to pay down early.

Approval takes more evidence than it used to

After a run of rising rates, the rate lenders assess you at has climbed too: they add a buffer above the rate they quote and test whether your business could still meet the repayments if rates move again. The same trading history that cleared the bar before is now being measured against a taller one, and higher repayments on your existing facilities reduce the surplus a lender can see in your accounts.

As a result, expect to be asked for more months of bank statements, a current tax and BAS position, and an explanation for any month that looks unusual. Depending on the lender and the amount, you may also be asked for security or a personal guarantee.

All of that stretches the gap between deciding you need funds and having them, so the equipment you planned to buy next month is a decision to start on now. Keeping your documentation current is the part you can control. The rest comes down to which lender you approach, since criteria and speed vary as much as rates do, and the final section covers how to compare on both.

Getting paid takes longer just as borrowing gets harder

When rates are higher, your customers are paying more to borrow too, so they hold on to cash longer. Invoices that used to clear inside thirty days start landing at forty-five, larger customers stretch their own payables to protect their position, and the businesses further down the chain absorb it. Discretionary spend gets deferred rather than cancelled, so orders come in smaller and later. That leaves you needing funding at the point it’s hardest to get.

To take control of what you can, start invoicing on the day of delivery and chasing invoices sooner. That pulls money in without asking for credit. Then keep timing in mind. Your bank statements are the evidence a lender reads, and they look different from one month to the next.

“Take action early. Waiting to see if you can trade through or cutting your cash flow fine is an unnecessary risk. It could make the application process more challenging if your business starts showing signs of cash flow stress or revenue drops,” says Adrian Mula, Finance Broker and Managing Director at Queensland Capital Solutions, in our working capital financing guide.

A facility approved in a steady month is there for the weeks when BAS, payroll and a supplier run land together.

Waiting for rates to fall carries its own cost

If you’re eyeing an office upgrade, a second van or a new shop fit-out, you might be inclined to wait until rates come down.

Nobody can tell you when that will be, but three questions can help you decide:

  • Does the purchase earn more than it costs to fund? If the second van adds jobs you’re currently turning away, run the extra margin against the repayment. Our loan calculator gives you that figure in about a minute.
  • Is the price of what you’re buying moving? Equipment, stock and fit-out costs don’t wait for the cash rate. If the price rises while you wait, the saving on a lower rate goes straight into the higher purchase price.
  • What does the delay cost you? Jobs you can’t take, capacity you don’t add and customers who go elsewhere are real costs, even though none of them appear on an invoice. Put a number on them before you decide.

Run those three and waiting may still be the answer. A deferral you’ve costed is a plan. Where it goes wrong is deferring by default, then borrowing under pressure later on terms you had no time to compare. A little cash flow planning settles which of those you’re heading for, and a cash flow forecast shows you which months could carry the repayment and which couldn’t.

Borrowing for the wrong length of time costs more now

At these rates, every month you carry a balance costs more than it used to, so the length of a facility matters as much as the rate on it.

Filling a six-week cash flow gap is a different problem from buying a piece of equipment you’ll run long term. Use a five-year loan for the short gap and you’ll be paying interest years after the gap closed. Fund the equipment on a short facility and the weekly repayment eats the cash flow it was meant to improve.

The solution is matching the funding to the length of the job. A business line of credit suits gaps that keep recurring, since you only pay interest on what you draw, with a weekly service fee on your facility limit. A small business loan suits a one-off purchase with a known cost, where a lump sum and a fixed interest rate let you plan the next few years around a repayment that doesn’t move.

The headline rate is one part of what you pay

Say two funding quotes are open on your screen and the interest rates are close enough to look interchangeable. How do you choose?

Ask every lender for the total amount repayable over the life of the facility. That single figure absorbs the establishment and ongoing fees and the length of the loan, and it’s the only number that compares apples with apples. Then look past the total at the terms that affect your cash flow: whether repayments come out weekly or monthly, what happens if you pay it out early, whether security is required, and how long approval and funding actually take.

Lenders assess differently and some move much faster, which matters when the stock order has a deadline on it. You can compare business loans side by side before you talk to anyone.

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Your position decides your next move

There’s no single right answer here. If you’re holding a fixed-rate loan with two years to run, you’re in a different position from an owner facing an overdraft review next month. Either way, you’re better off knowing what you’d qualify for before you need it.