The RBA’s key message is clear:

“Despite ongoing pressures, the business sector remains resilient overall given stable profit margins, strong credit availability and generally robust balance sheets.”

So what’s sitting behind this resilience?

1. Stable profit margins

Most firms are still profitable, with operating profit margins sitting around the levels recorded during the 2010s. That’s encouraging, considering how much input costs – like wages, materials, energy and transport – have increased over recent years.

Even more interesting is what the RBA found about small and medium-sized enterprises (SMEs). SME profitability data suggests that most smaller businesses have been able to maintain, or even slightly improve, their operating margins, despite strong cost growth.

That tells us a few things:

• Businesses are adapting – by adjusting prices, improving efficiency or reshaping their offerings.

• Owners are watching their numbers closely and making decisions to protect margins.

• Many businesses have a stronger underlying model than they might feel day-to-day.

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Strong balance sheets and better access to credit

Another big positive in the RBA’s assessment is the strength of business balance sheets.

Many businesses:

• Hold reasonable levels of cash or liquid assets

• Have manageable levels of debt

• Are supported by lenders who are still keen to do business

The RBA notes that lenders remain willing to provide credit, and that increased competition among lenders has:

• Supported credit availability for many businesses

• Reduced refinancing risks over the past year

In practical terms, this means:

• Businesses looking to refinance existing loans may find competitive offers available.

• Those wanting to invest in growth, new equipment or working capital may have more options than they realise.

• Well-managed businesses with solid financials are still viewed positively by lenders.

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What this means if you own a business

Even though the headlines often focus on “cost of living crises” and “economic uncertainty”, the RBA’s message is more balanced: things are challenging, but far from dire for many businesses.

If you’re a business owner, here are a few takeaways:

1. Don’t underestimate your resilience

If you’ve managed to:

• Keep trading through tough conditions

• Maintain or improve profitability

• Manage your debt and obligations

then you’re already demonstrating the same resilience the RBA is seeing in the broader data. That’s something worth acknowledging – and building on.

2. Use finance strategically, not just reactively

Because credit is still available and competition between lenders is strong, now can be a good time to:

• Review your current loans – Are your rates, terms and structures still right for your business?

• Consolidate or restructure debt – This may help smooth cash flow and reduce risk.

• Secure working capital – To help manage seasonal fluctuations or fund growth opportunities.

• Consider asset finance – For vehicles, equipment or technology that could improve efficiency.

Rather than waiting until cash flow is under severe stress, it’s often smarter to review your finance while things are stable.

3. Strengthen your balance sheet where possible

A strong balance sheet gives you flexibility and peace of mind. You might look at:

• Gradually paying down high-cost debt

• Building a cash buffer for unexpected expenses

• Ensuring your facilities (overdrafts, lines of credit, business loans) are properly structured to match how your business actually operates

These steps can make you more resilient if conditions tighten again.

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How a finance review can help

Every business is different – industry, size, cash flow patterns and goals all vary. That’s why a personalised review of your business finance can be so valuable.

A review can help you:

• Understand whether your current loans are still competitive

• Identify opportunities to improve cash flow or reduce risk

• Explore options to support growth, like new premises, equipment or staff

• Make sure your finance structure matches your short and long-term plans

Sometimes, small changes to the way your lending is set up can have a big impact on your monthly cash flow and overall financial strength.

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The bottom line

The RBA’s latest review offers a positive message:
Most Australian businesses remain in good shape, with:

• Stable profit margins

• Strong access to credit

• Generally robust balance sheets

Yes, pressures are still real – costs are higher, conditions are competitive and uncertainty remains. But the data shows that many businesses are not just surviving, they’re coping well.

If you’d like to turn that resilience into even greater strength, now is a great time to look at your business finance, cash flow and loan structures.

💬 Want to review your business finance options to help strengthen your cash flow and balance sheet?
Reach out and I’ll be happy to go through your situation and discuss what might work best for your business.