On 12 August 2025, the Reserve Bank of Australia (RBA) delivered its third interest rate cut this year, bringing the cash rate down to 3.60%. This decision lands in a critical macroeconomic context: GDP growth is slowing, unemployment is nudging higher, and inflation has finally settled within the RBA’s 2-3% target range.
While the RBA’s August decision marked the third rate cut of the year, future easing is not guaranteed. As RBA Governor Michele Bullock cautioned, “That’s good, but it does mean that it’s possible that if [spending] keeps going, then there may not be any interest rate declines yet to come. But it all depends.”
For small to medium enterprises (SMEs), this isn’t just a headline. It’s a signal. Lower interest rates can fundamentally shift how businesses approach debt, growth, and pricing strategies.
Headline Figures Explained
The 25 basis point cut, from 3.85% to 3.60%, might sound small, but it has practical impact:
- A typical $600,000 loan could now save $89 per month.
- Refinancing opportunities are surging. According to Canstar, SMEs and households could save up to $272/month if they switch to competitive offers.
- The flow-on effect? More cash in your business, more flexibility in planning.
How This Affects Small and Medium Businesses
- Debt Servicing and Working Capital
Reduced interest obligations mean increased cash flow. This is the perfect time to:
- Revisit your loan structures and seek more favourable terms.
- Free up working capital for operational improvements or margin uplift.
- Ask the key question: Is your capital truly optimised?
- Accelerating Growth Plans
Businesses that have been waiting on the sidelines, delaying expansion, acquisitions, or capital expenditure, now have reason to move.
- Cheaper financing makes strategic growth moves more viable.
- Acquisition targets may become more attractive under improved borrowing conditions.
- Interest rate movement alone doesn’t justify a big move. But paired with a solid growth strategy, it can be the catalyst.
- Repricing and Margin Strategy
If you operate on tight margins or lend as part of your business model, this is the time to:
- Review your pricing frameworks.
- Consider how (or if) you pass on savings to customers, or use lower costs to strengthen your position.
- Explore using reduced cost of capital as a competitive edge.
Wider Market Movements to Watch
- AUD Weakness: Exporters may benefit; import-heavy businesses may face cost pressures.
- ASX Movements: Major banks and financial stocks like CBA took a dip post-announcement; investor confidence is recalibrating.
- Currency & Portfolio Exposure: For businesses holding international investments or managing FX risk, now’s the time to reassess your exposure and hedging strategies.
What Should Business Owners Do Now?
Here’s a quick action list:
- Review your debt structure. If it hasn’t been updated in the last 12 months, you’re overdue.
- Explore refinancing to free up working capital or reduce repayment pressure.
- Revisit your growth strategy. Could this be the time to accelerate?
- Evaluate pricing models. There’s opportunity in being first to adjust.
- Assess your strategic readiness. Do you have the structure and capability to scale if the opportunity is right?
How Dillon Clyne Can Help
At Dillon Clyne, we deliver real-time, outcome-focused solutions designed for business owners navigating complex decisions. We empower clients to lead, not follow, with services ranging from debt structuring and capital raising to strategic readiness.
We also support directors and owners through private wealth strategies, integrating business and personal finance decisions with clarity and confidence.
We help you make decisions before the rest of the market catches up.
Need clarity on what this rate cut means for your business?
Let’s sit down for a strategic review. Book a consultation now to get started.