RateSeeker Business Round-Up: May 2025

RateSeeker Business Round-Up: May 2025

Business Confidence Lifts as Cost Pressures Ease – Is Growth Back on the Agenda?

As we progress through 2025, Australia’s economic outlook continues to stabilise. Inflation is easing, borrowing conditions are improving, and confidence among business owners is starting to return. That said, the recovery remains patchy, with consumer spending still conservative and cashflow pressures lingering for small businesses.

In this month’s RateSeeker Business Round-Up, we dive into the key trends shaping operations, confidence and borrowing decisions for FY26:

• Business confidence rebounds as inflation softens
• SME lending is rising thanks to increased bank competition
• Cashflow remains tight — but targeted tax relief may help
• Consumer spending is slowly improving
• Hiring stabilises as workers prioritise job security

Let’s explore what these shifts mean for businesses planning their next move.

Business Confidence Rebounds as Cost Pressures Ease

After a challenging two years, optimism is finally returning to the business sector. Nab’s latest Monthly Business Survey shows confidence lifting into positive territory for the first time since early 2024. The big drivers behind the turnaround include:

• Softer input costs — energy and materials are finally stabilising
• A lift in pipeline work for trades and construction
• Stronger investment activity across business services
• Supportive borrowing conditions as interest rates ease

However, improvement remains uneven. Retailers are still facing fragile demand as households restrict discretionary spending. And while costs are stabilising, they remain well above pre-pandemic levels, meaning profitability is still being squeezed in some sectors.

But positive sentiment matters — confidence is the spark that encourages businesses to:

• Invest in equipment
• Expand operations
• Hire talent
• Pursue innovation

With a more stable environment taking shape, businesses that plan ahead may find they’re well-positioned when growth accelerates later in the year.

SME Lending Grows as Banks Compete Harder for Customers

After a long period of risk-averse lending, SME finance is once again gaining momentum. The Australian Banking Association reports an uplift in small-business loan approvals for the third straight quarter, driven by:

• Lower variable lending costs following the RBA’s rate cut cycle
• Banks reducing turnaround times and paperwork
• Flexible lending structures — including asset-backed and cashflow-based options

For many operators, finance isn’t just about lower rates — it’s about lending that supports real-world business needs. Lenders are responding by offering:

• Equipment finance with low-doc options
• Working capital loans tailored to seasonal revenue cycles
• Trade and invoice finance to smooth cashflow gaps
• Commercial property lending with competitive equity thresholds

With borrowing conditions shifting in favour of business owners, brokers play a critical role in navigating a rapidly changing lending environment.

If your business is preparing for expansion, now could be a smart time to assess your borrowing power — before demand accelerates and lenders tighten again.

Cashflow Remains the Biggest Barrier to Business Growth

While confidence is rising, day-to-day financial pressure hasn’t disappeared. Xero’s latest small-business index highlights ongoing challenges:

• Overdue invoices remain above historical averages
• Insolvency rates have climbed 20% year-on-year
• Wage costs are stable but still elevated
• Rent and insurance remain expensive in many sectors

The result? Many small businesses are stuck in transition: revenue is recovering, but expenses have not fully readjusted.

There is some relief on the way. Several initiatives are aimed at improving affordability in FY26:

• Potential extension of the Instant Asset Write-Off
• Small business tax cuts legislated to commence 1 July
• ATO hardship and payment support expanding to reduce debt strain

The message for businesses is clear — proactive financial management will be essential.

Businesses should continue prioritising:

• Cashflow forecasting
• Invoice follow-up and automation
• Proactive refinancing to reduce repayment strain
• Strategic borrowing for revenue-driven investments

A well-structured finance strategy doesn’t just solve short-term stress, it unlocks growth when recovery fully takes hold.

Consumers Are Spending Again — But Cautiously

After two years of tightening belts, households are slowly regaining the confidence to spend. ABS spending data shows modest improvement through the March–April period, particularly in:

• Domestic travel and hospitality
• Health and wellbeing services
• Entertainment and experiences

However, consumer spending on non-essential goods remains muted. Shoppers are still value-driven, prioritising:

• Discounts and loyalty benefits
• Flexible payment options
• Strong brand trust
• Clear value for money

Businesses winning in this environment are adapting their sales strategies by:

• Leaning into digital experience and repeat-customer engagement
• Bundling offers instead of across-the-board discounts
• Providing financing or subscription-style models
• Investing in personalised marketing

The slower pace of recovery shouldn’t discourage businesses — instead, it highlights the importance of building long-term customer loyalty during this transitional phase.

Hiring Conditions Stabilise as Talent Retention Improves

After a period of labour shortages and wage escalation, the job market is becoming easier for employers to navigate:

• Unemployment is holding around 4.1%
• Skilled workers are staying longer in roles
• Job-hopping has declined as economic confidence remains cautious

While recruitment is easing, employers are being strategic. Growth-focused businesses are:

• Strengthening employee development pathways
• Increasing hybrid flexibility instead of salary blowouts
• Investing in automation and tools to boost productivity

The best time to build capability is before the market heats up again — and there are early signs of that happening as demand lifts sector-by-sector.

Key Takeaways for Business Owners

We’re entering a more stable economic environment — but not yet a booming one. That means success depends on running a business that’s both resilient and ready to take advantage of growth.

Here’s where smart operators are focusing their attention:

• Strengthen your cashflow foundations
• Invest only in efficiency-driven upgrades
• Secure lending flexibility before demand rises
• Offer value-led pricing and customer experience
• Build teams with long-term capability in mind

The long-awaited economic turnaround appears to be underway. Positioning now could determine competitiveness for the next 12–24 months.

Let’s Help You Plan Your Next Phase of Growth

Whether you’re planning to purchase new equipment, improve cashflow resilience, expand your operations and invest in growth, refinance existing lending facilities, or even buy a commercial property, we can help structure the right finance to support what comes next. 

RateSeeker brokers compare lenders to secure sharper pricing, restructure finance to create breathing room, unlock equity without draining cash reserves, and prepare compelling applications that help strengthen approval odds. If you’re considering a new business finance strategy — or simply want to review whether your current lending still fits your goals — we’re here to help you make a confident move forward.

Speak to one of our experienced mortgage specialists for personalised help today.