Lender Rate Rises: What They Mean for Business Loans and Equipment

Written by Ferns Finance. Last updated 13 October 2026.

The Reserve Bank of Australia (RBA) raised the cash rate on 29 September 2026, and lenders are now raising variable rates on business and commercial loans as well as home loans. If you run a business in Logan, Brisbane or the Gold Coast and you have a variable loan or overdraft, your costs are likely to rise. A signed fixed-rate equipment loan generally will not change.

At Ferns Finance, we help business owners with business loans and asset finance, and this is a good moment to look at every facility you have in one place.

Key takeaways

• Small rises add up across several facilities. In our example, three facilities cost about $62 more a month.
• Lenders have started announcing variable rate increases of around 0.25 percentage points. Some commercial and non-bank lenders have notified brokers of similar rises, with effective dates in the first half of October.
• Variable business loans and overdrafts often move with the cash rate. A signed fixed-rate loan, such as a chattel mortgage, generally stays the same until it ends.
• New quotes reflect today's funding costs, so get pricing early if you are planning a purchase.

What have lenders done since the RBA decision?

Lenders have started raising variable rates by around 0.25 percentage points, and some commercial and non-bank lenders have notified brokers of similar changes to business and commercial lending. Details differ by lender, loan type and whether the loan is new or existing, so check your own documents.

The RBA Monetary Policy Board voted unanimously on 29 September to lift the cash rate, and said it will continue to do what it considers necessary, including increasing the cash rate target further if needed.

Which business loans are affected, and which are not?

Variable-rate business loans, overdrafts and some lines of credit often move after a rate rise. Fixed-rate loans generally do not change until the fixed term ends. A signed fixed-rate asset finance deal, such as a chattel mortgage (a loan secured against a vehicle or equipment), generally keeps its rate for the term.

What does change is the price of new finance. If you are quoting for a ute, machinery or equipment now, the quote reflects current funding costs. Check your loan contracts to confirm your rate type, because the terms vary.

What can a 0.25 percentage point rise cost my business?

Here are illustrative examples, not lender rates.

• Equipment loan. A $120,000 loan over five years costs about $2,462 a month at 8.50% and about $2,476 at 8.75%. That is roughly $14 more a month.
• Commercial term loan. A $300,000 loan over seven years costs about $4,751 a month at 8.50% and about $4,789 at 8.75%. That is roughly $38 more.
• Overdraft. On a $50,000 balance, interest at 9.00% is about $375 a month and at 9.25% about $385. That is roughly $10 more.

Across all three, that is about $62 more a month, or roughly $750 a year. Each rise is small, but together they add up alongside higher energy and supplier costs, and they follow three earlier rises this year.

Is equipment finance still worth it when rates are rising?

Often yes, because it can protect working capital. Paying cash for equipment can drain the reserves you need for wages, tax and repairs. Financing spreads the cost across the years you use the equipment. The right answer depends on the total cost, the loan term, any balloon payment and the tax treatment. We compare both options before you commit, and we suggest you speak to your accountant about tax.

If you are planning a purchase, three things can change the repayment more than a quarter of a point:

• Term. A longer term lowers the repayment but usually increases total interest.
• Deposit. Deposit requirements depend on the lender, the asset and your deal.
• Balloon payment. A final lump sum lowers repayments during the loan but must be paid, refinanced or settled at the end.

How can I protect cash flow when costs rise?

There is rarely a single fix, but a few habits help. Keep a cash buffer for slow months. Invoice promptly and follow up late payers. Review supplier terms. Set tax money aside separately so it is not mixed with working capital. And avoid funding long-term assets with short-term credit, such as credit cards, which is often the most expensive way to borrow.

It can also help to review all your facilities together. Options may include consolidating several loans, restructuring an overdraft, or moving from short-term credit to longer-term asset finance. Each has trade-offs on total interest, so we model them before you decide.

What if I have a quote or application in progress?

This is where timing matters. Some lenders apply a rate rise to quotes that have not been formally approved, while others honour the earlier pricing if you are approved by a set date. Rules differ by lender, so ask your broker to check the specific lender before you assume your quoted rate still applies.

If you have not yet signed, a fixed rate can give you certainty on repayments, but fixing can have break costs if you exit early. Variable can offer flexibility, such as extra repayments. The RBA has said it may lift rates further if needed, so consider how much repayment change your cash flow can handle.

Next steps: things you can do this week

1. List every facility. Loans, overdrafts, credit cards, ATO payment plans and equipment finance.
2. Check rate type and expiry. Variable or fixed, and when it ends.
3. Check for lender notices. Look for emails or letters about a rate change.
4. Pressure-test cash flow. Assume another 0.25 to 0.50 percentage points.
5. Time big purchases. Get pricing before you commit. Try our loan repayment calculator.
6. Talk to us. We compare across our lender panel, including non-bank options.

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Common questions

Will my business loan repayments go up after lenders raised rates following the RBA rise?

If your business loan has a variable rate, repayments may rise once your lender raises its rate, and some lenders have announced rises of around 0.25 percentage points. Fixed-rate loans generally do not change until the fixed term ends. Check your loan contract or ask your lender which rate type you have.

Does a rate rise change my existing equipment finance or chattel mortgage?

A signed fixed-rate equipment loan or chattel mortgage generally does not change for the term. A variable-rate one can. The rate rise mainly affects new quotes, which reflect current funding costs. Check your contract, because rate type, fees and balloon terms differ between lenders.

How much does a 0.25 percentage point rise cost on a business loan?

As an illustration, a $120,000 equipment loan over five years costs about $2,462 a month at 8.50% and about $2,476 at 8.75%, roughly $14 more. A $300,000 seven-year loan costs about $38 more. These are hypothetical figures, not lender rates, and your costs depend on your loan.

Should I buy equipment now or wait for rates to come down?

Nobody can reliably predict rates. The RBA has said it may lift rates further if needed. Waiting only helps if the delay does not cost you work, and a signed fixed rate can lock in your costs. Compare finance and paying cash, and speak to your accountant about timing.

Do business lenders pass rate rises on to overdrafts and lines of credit?

Often yes, because overdrafts and lines of credit are commonly variable. The change depends on your contract and the lender, so check your facility terms or your lender's notice. A fixed-rate term loan generally stays the same until it ends. Review all your facilities together to see where your costs sit.

What happens to a business loan quote if the lender raises its rates before I sign?

It depends on the lender. Some lenders apply the new rate to quotes that are not yet approved, while others honour earlier pricing if you are approved by a set date. Ask your broker to confirm the lender's current rules and how long your quote is valid.

General information only. This article is general educational content and is not financial, tax or legal advice. Speak to a qualified professional about your circumstances.