iscoverThe Reserve Bank’s recent decision to hold the cash rate steady rocked the small business community, with many set to keep a close eye on it over the coming months.
46% of Aussie SMEs directly impacted by interest rate changes, MYOB reveals
24 July 2025
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8 minute read
Small business owners will keep a “watchful eye” on the RBA’s cash rate following its recent hold, having shocked the grappling SME community.
Recent research from MYOB has revealed that small businesses were significantly impacted by the rise in interest rates over the past two years, with many hoping this year’s estimated cuts will provide much-needed relief.
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Following the RBA’s shock decision to hold the interest rate steady at 3.85 per cent on 9 July, Australia’s small business community was left reeling after the majority predicted a cash rate cut of 0.25 per cent.
According to MYOB, its recent Bi-Annual Business Monitor found that 46 per cent of SME respondents said rate rises across the past two years had impacted the operational costs of their business.
Dean Chadwick, MYOB chief customer officer, said the decision to hold the cash rate steady at 3.85 per cent would be watched closely by small businesses over the next few months.
“While this hold will offer an important pause for economic stability, 21 per cent of responding SMEs said cuts of 0.75-1.0 per cent would be needed to relieve business costs, while 29 per cent believed it would take more than a full percentage point to turn the tide,” he said.
“Despite external challenges, the SMES that drive our economy from employment opportunities to innovation to regional growth – once again demonstrate their resilience.”
The Business Monitor, based on the answers of 1087 Australian SME owners, also found that after rising in mid and late 2024, sentiment had recently marginally reduced.
Expectations of economic improvement were most prevalent in the start-up sector, while those expecting a decline had risen slightly from 41 per cent in December 2024 to 45 per cent in June 2025.
On the other hand, it was found that confidence had somewhat improved over the last six months, with just over 21 per cent now expecting to see the economy improve by December 2025.
Chadwick said there was “light at the end of the tunnel” for key sectors within the SME community, specifically the construction sector.
“After a challenging year, the construction sector appears to have turned a corner, becoming the most optimistic about the economy in the latest survey. Thirty-three per cent of those surveyed from the industry expect economic conditions to improve over the coming 12 months – making it the most optimistic sector in the current MYOB Bi-Annual Business Monitor,” he said.
“After leading positive sentiment in late 2024, the retail and hospitality sectors have experienced a strong fall in confidence, down from 34 per cent expecting the economy to improve in December 2024, to just 14 per cent anticipating improvement. Those expecting to see a decline have also risen 10 percentage points over the same period.”
Chadwick also added that while the RBA had not delivered the July rate cut as expected, small businesses would continue to hold out until relief was delivered.
“For accountants, the trusted advisers of SMEs, now is a key time to support clients with strategic planning around cashflow, debt management and cost control.”
“Guidance on resilience strategies and digital efficiencies is more valuable than ever.”
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