Small Businesses Feel the Pinch of Interest Rates

The Business

Topic: Small Businesses

Friday, 24 July 2026, at 4:58 am

Barcaldine, a town in central Queensland, has about 1,500 people.

In short:

Small and medium-sized businesses have had a tough year due to rising fuel prices, interest rates, and inflation, along with changes in regulations.

More businesses are going bankrupt, and credit shopping is increasing.

What's next?

The small business council wants more government support, like increasing the tax threshold for instant asset write-off.

Barcaldine is a small town between Longreach and Yeppoon in central Queensland.

Tourists visit Barcaldine because of its history and beautiful streets.

Jeff Bowman owns a local tourist shop and cafe, and he considered closing it due to the war in Iran.

Jeff and Kerry-Ann Bowman run two retail stores.

High petrol prices kept tourists away, which hurt Jeff's business.

His business was down 42 percent, which is a big loss.

Jeff is one of many small business owners worried about the end of the fuel excise in August.

The rise in costs, including electricity and freight, is also hurting his business.

The price of oil is rising, and the fuel excise cut will end soon.

Jeff cannot buy from some suppliers because of high freight costs.

It has been a tough year for small businesses due to oil prices, interest rates, and inflation.

New regulations, like payday super and changes to credit card surcharges, are also affecting businesses.

Consumer sentiment is low, and businesses are dealing with higher bills.

A small bank lender is signaling stress for small businesses.

In June, Judo Bank announced a profit downgrade due to three troubled loans.

The loans were to a window manufacturer, a financial planner, and a construction business.

Judo Bank specializes in lending to small and medium-sized businesses.

Insiders say each loan had unique issues, but the profit downgrade was still worrying.

Judo Bank's shares fell 46 percent, losing $700 million in value.

Credit agency Equifax says the SME sector is resilient but has pockets of distress.

Small businesses are struggling with rising costs, and a recent wage increase was the final blow.

Small business insolvency rates are increasing, with a 13 percent rise in the last six months.

More businesses are closing, with a 37 percent increase in business exit rates.

Businesses are taking longer to pay suppliers, with 9.5 percent taking 31-60 days to pay.

Credit shopping is up.

Equifax's Brad Walters says there has been an increase in credit shopping among high-risk small businesses.

Brad Walters says there are pockets of distress in the small business sector.

These pockets of distress include businesses in construction, manufacturing, and transport.

High-risk small businesses are having trouble getting loans, which is a big problem.

Small businesses are moving away from plans to expand, especially in Victoria.

Small businesses are being cautious and are concerned about cash flow.

Interest rates are hurting businesses too.

For Victorian steel manufacturer Solidity, interest rate rises are a big challenge.

The company makes helical piles for residential and commercial builds.

Solidity says it has a large bank loan, and every interest rate rise hurts.

The company employs 40 people and feels the impact of fuel price rises.

When fuel prices were high, the cost of running the business increased by 30 percent.

The company is expanding to a larger site, but the owner says support for SMEs is missing.

Solidity makes screw pile shafts and employs around 40 people.

The rising price of steel is adding to costs, and competition from cheap imports is increasing.

The company has seen steel price increases of 4 percent every two months.

Imported products are coming into Australia at 15-50 percent lower prices than local bids.

The loan rules for the government's Economic Resilience Program are too tight.

The company does not get priority on state-run building projects.

The ERP was announced to give businesses access to zero-interest loans.

The company is expecting a real pinch in the coming months.

Instant asset write-off help is needed.

The Council of Small Business Organisations wants the government to raise the tax threshold for instant asset write-off.

The current threshold is $20,000, but it needs to be higher to support small businesses.

Small businesses are resilient, but times are tough, and pressures are high.

The Small Business Minister says the government is offering practical support, including tax breaks.

The government is delivering $3.8 billion in new measures to lower taxes for businesses.

Payday super takes effect soon, but some businesses are unaware of the changes.

Reforms like payday super will benefit workers and make payroll management smoother.

Good workers are critical to any successful business, and fair wages and super help attract and retain them.

Jeff Bowman wants remote businesses to get more support to overcome the tyranny of distance.

He wants tourism in outback Queensland to continue growing.

See more ABC coverage.

Promotion

Practice Listening

Practice Listening