What the 2026 Federal Budget, high business insolvencies and the October credit card surcharge changes mean for Australian small-business cash flow, borrowing and investment.
There is only so much cost a business can absorb before something has to give.
For the past few years Australian business owners have dealt with rising wages, insurance, energy, rent, freight, interest costs, compliance and the general cost of keeping the doors open. Consumers have simultaneously been watching their own household budgets, which makes simply putting prices up considerably easier to suggest than it is to actually do.
Now we have another Federal Budget reshaping the tax treatment of investment and business structures, insolvencies remaining extraordinarily high and, from 1 October, changes to card surcharging that mean another cost previously visible to the customer may instead disappear quietly into the business's margin.
None of these things operates in isolation. For small business, they land on the same profit and loss statement and ultimately on the same bank account.
What does the 2026 Federal Budget mean for small business?
There are measures in the 2026 Federal Budget worth acknowledging. Making the $20,000 instant asset write-off permanent provides certainty, while the reintroduction of loss carry-back will provide genuine cash-flow assistance to some companies.
The bigger tax changes deserve considerably more attention from business owners.
Changes to capital gains taxation and discretionary trusts alter the environment in which people invest, structure businesses, accumulate assets and ultimately extract a return from taking business risk. CPA Australia has warned that the reforms could disproportionately affect small business owners and discourage investment, while Chartered Accountants ANZ has raised concerns about the complexity and impact of the proposed 30 per cent minimum tax on discretionary trust distributions.
That matters because small business doesn't exist separately from the person who owns it.
Most owners have put their own capital at risk, often provided personal guarantees, worked ridiculous hours, employed other people and spent years building an asset they hope will eventually provide some financial reward.
Policy that changes the economics of taking that risk changes business behaviour.
The permanent $20,000 instant asset write-off is useful, but let's keep it in perspective. Twenty thousand dollars does not buy much commercial equipment in 2026, and a tax deduction does not put the purchase price into your bank account.
Why are so many Australian businesses becoming insolvent?
ASIC recorded 14,153 companies entering external administration for the first time during 2025–26.
That figure was actually 4 per cent lower than the previous financial year, so this isn't about manufacturing a dramatic headline suggesting insolvencies have suddenly exploded again. The important point is that business failures remain at an extraordinarily high level.
Construction accounted for almost a quarter of appointments, followed by accommodation and food services.
Those failures don't stay neatly contained within the failed business.
They leave subcontractors unpaid, suppliers carrying bad debts, landlords without rent, employees looking for work and other businesses trying to replace revenue they reasonably expected to receive.
If you're running on a 10 per cent net margin and a customer leaves you with a $50,000 bad debt, you don't simply need another $50,000 of sales to recover it.
At a 10 per cent margin, you need $500,000 in additional revenue to replace the profit lost on that $50,000.
That's the bit that tends to get people's attention.
What do the credit card surcharge changes mean for businesses from 1 October 2026?
From 1 October 2026, businesses can no longer apply card surcharges across Visa, Mastercard, American Express and eftpos credit, debit and prepaid card transactions under the new card-network rules.
For customers, the change is straightforward. For businesses, the underlying cost of accepting card payments hasn't magically disappeared with the surcharge.
There are accompanying payment reforms intended to reduce merchant costs, improve transparency and increase competition, which should help businesses. Every business, however, still needs to understand what accepting card payments actually costs it.
If you previously passed that cost directly to customers and can no longer do so, it becomes part of your cost base.
On a transaction it might look insignificant.
Across several million dollars of annual turnover, it isn't.
This is exactly how margin gets eaten away in small increments while everyone remains focused on revenue.
Revenue isn't the same thing as financial strength
A business can be busy and still be financially vulnerable.
It can have record revenue and deteriorating cash flow. It can own millions of dollars in equipment and struggle to make payroll. It can show an accounting profit while its working capital disappears into debtors, stock, tax obligations and loan repayments.
I see enough businesses from the finance side to know that the warning signs often appear well before the actual crisis.
Facilities start being used differently. The credit card doesn't quite clear each month. BAS debt starts accumulating. Suppliers get stretched another week. Equipment that should have been replaced gets another twelve months squeezed out of it. Short-term finance starts funding expenses that aren't short term at all.
Each decision is understandable on its own. Collectively, they tell you something.
When should a business refinance or restructure its debt?
More debt is not automatically the answer to a cash-flow problem.
The first question should be why the cash-flow problem exists.
If a fundamentally profitable business has capital tied up in equipment, debtors or poorly structured existing facilities, there may be a very sensible finance solution. Refinancing, restructuring debt, funding an asset over its useful life or establishing appropriate working-capital facilities can make an enormous difference.
If the underlying business is losing money on every sale, another loan may simply give it more time to lose more money.
Knowing the difference matters.
At SFE Loans, that's why the conversation starts with the business rather than the loan. I want to understand what the money is supposed to achieve, where the cash is currently going and whether the proposed finance actually leaves the business stronger afterwards.
For businesses across the Clarence Valley, Northern Rivers and regional NSW, these national changes are landing on top of the same pressures we've been seeing locally: higher operating costs, tighter margins and less tolerance for poorly structured debt.
Because in this environment, getting the loan approved is the easy measure of success.
Making sure it was the right loan in the first place is the one that matters.
Frequently Asked Questions
Can Australian businesses still charge a credit card surcharge in 2026?
From 1 October 2026, surcharging is no longer permitted across Visa, Mastercard, American Express and eftpos credit, debit and prepaid card transactions under changes implemented by the major card networks. Businesses should review their merchant arrangements, transaction costs and pricing to understand how payment processing costs will now affect their margins.
What did the 2026 Federal Budget change for small businesses?
The 2026 Federal Budget made the $20,000 instant asset write-off permanent and reintroduced loss carry-back for eligible companies, alongside broader tax changes affecting investment, capital gains and discretionary trusts. The impact will vary considerably according to business structure, ownership and investment arrangements, so businesses should obtain appropriate accounting and tax advice about their individual circumstances.
Can refinancing business debt improve cash flow?
It can, but only where the underlying problem is appropriate for refinancing. Restructuring loan terms, consolidating unsuitable debt or matching asset finance to the useful life of an asset can improve monthly cash flow. Refinancing does not fix a business that is fundamentally unprofitable, which is why the underlying financial position should be understood before taking on additional debt.
When should a business use working-capital finance?
Working-capital finance can be appropriate where a profitable business experiences timing differences between paying expenses and receiving revenue, such as businesses with long debtor periods, seasonal cash flow or significant contracts requiring upfront expenditure. It should generally solve a genuine working-capital timing requirement rather than become permanent funding for ongoing operating losses.
Sources and further reading
Australian Securities and Investments Commission (ASIC)
Corporate insolvency statistics and external administration data, 2025–26.
Reserve Bank of Australia (RBA)
Review of Retail Payments Regulation and reforms to merchant payment costs and card payments.
Australian Government, Budget 2026–27
Small-business taxation, instant asset write-off, loss carry-back and broader taxation measures.
CPA Australia
Analysis of the 2026–27 Federal Budget and its implications for Australian businesses and investors.
Chartered Accountants Australia and New Zealand (CA ANZ)
2026–27 Federal Budget analysis, including discretionary trust and taxation reforms.
Council of Small Business Organisations Australia (COSBOA)
Small-business response to the 2026–27 Federal Budget.
About the Author
Sarah Eifermann | SFE Loans
Sarah Eifermann works with business owners across the Clarence Valley, Northern Rivers and regional Australia on business, commercial and asset finance. With more than 20 years' experience across finance, business strategy and advisory, Sarah's approach starts with understanding the business and the commercial outcome before deciding how, or whether, it should be financed.
SFE Loans | Business, Commercial & Asset Finance
