RBA rate cut brings relief and renewed optimism for SMEs

Leading non-bank lender Banjo Loans has welcomed the Reserve Bank of Australia’s (RBA) decision to cut the official cash rate by 25 basis points, saying the move provides much-needed breathing space for Australia’s small and medium-sized enterprises (SMEs).

The first rate cut since May, it marks a turning point for many small businesses who have been managing the dual pressure of high inflation and elevated borrowing costs.

“This rate cut is more than symbolic. It’s a tangible step toward easing the financial pressure on SMEs. Realistically, they could have gone even further with a 50 basis points cut to really give the SME market a boost,” said Guy Callaghan, CEO of Banjo Loans.

“Lower interest rates can help in a number of ways including reducing loan repayment costs, improve cash flow and nearly the most important, restore confidence for business owners looking to invest or expand.”

How the Rate Cut Benefits SMEs

Banjo Loans says the 0.25% cut can translate into meaningful outcomes for SMEs across Australia:

• Reduced borrowing costs, easing cash flow burdens for businesses with variable-rate loans or finance facilities.
• Greater affordability of growth capital making it more financially viable to invest in equipment, staff, or expansion plans.
• Restored confidence encouraging investment and risk-taking that may have been paused during tighter monetary conditions.

“Many SMEs have had to delay investment or cut back on hiring due to a lack of confidence in a higher interest rate environment,” Callaghan said.

“This rate cut could be the start to helping turn the tide, reinvigorating growth plans, creating jobs and supporting innovation across the small business sector.”

However, Banjo Loans cautioned that while the cut is welcome, more support is needed from government to help SMEs fully benefit from the easing cycle.

“We need to see targeted support, such as low-interest government-backed loans, innovation grants and refinancing assistance, to help businesses take advantage of the changing economic environment,” said Callaghan.

Call for Fiscal Discipline 

Banjo Loans also echoed calls for responsible fiscal management to avoid undermining the RBA’s efforts.

“We’re finally seeing signs that inflation is stabilising,” Callaghan said. “It’s vital that the Government avoids overspending, which could reverse these gains. SMEs, families and the broader economy all benefit when inflation is under control.”

Support for SMEs During the Transition

As a leading non-bank lender, Banjo Loans continues to support SMEs through periods of economic adjustment by providing tailored funding solutions and refinancing options.

“We encourage SMEs to review their current finance arrangements and explore options like refinancing or loan restructuring,” said Callaghan.

“With the right finance partner, businesses can make the most of this rate cut and set themselves up for growth.”