The cash rate is 4.35 per cent. What that does to what a buyer can pay
The RBA raised in May and has held since. Rates do not change what your business earns, they change how much of it a buyer can borrow against, and that is a different problem with different answers.
General information only, not financial, legal or taxation advice. Tony Pope holds Queensland Office of Fair Trading licence 4963575.
The short version
- The RBA raised the cash rate target by 25 basis points to 4.35 per cent on 5 May 2026 and left it unchanged at 4.35 per cent on 11 August 2026.
- A higher cost of debt does not reduce your earnings. It reduces the amount a lender will advance against those earnings.
- That shows up as more deferred consideration, more vendor finance requests and longer conditional periods rather than as a lower headline price.
- Businesses with clean, provable, transferable earnings are the ones that still get funded, because the lender is underwriting the evidence as much as the number.
The Reserve Bank raised the cash rate target by 25 basis points to 4.35 per cent on 5 May 2026, and at its meeting on 11 August 2026 left it unchanged at 4.35 per cent.
Owners read that as a headline about mortgages. For anybody thinking about selling in the next year or two, it is a headline about buyer capacity, and that is the part worth understanding.
Rates do not price your business. They price the buyer's borrowing
Your earnings are what they are. A rate decision does not change last year's profit or this year's contracts.
What it changes is the calculation a lender runs when a buyer asks to borrow against those earnings. Higher servicing cost means a given level of earnings supports a smaller loan. The buyer who could fund $900,000 against your business at one cost of money can fund less at a higher one, with nothing about your business having changed at all.
That is the mechanism, and it is worth being precise about it because it points at different responses than "the market is soft".
How it actually shows up in offers
Rarely as a lower headline price. Almost always as a change in structure.
More deferred. The buyer offers your number but wants a third of it paid over two years, because that is the portion they cannot fund at settlement.
Vendor finance requested. A direct ask for you to carry part of the price. Sometimes reasonable, sometimes an indication the buyer is stretched, and the difference between those two is worth establishing carefully.
Longer finance clauses. Thirty days becomes forty five or sixty, because approvals are taking longer and lenders are asking for more.
More questions about earnings quality. A lender at a higher cost of money has less room for error, so the evidence behind the earnings gets tested harder. Add-backs that were waved through two years ago get queried now.
What you can actually do about it
Nothing about the cash rate. Quite a lot about the thing it interacts with.
The businesses still being funded comfortably are the ones where earnings are provable, repeatable and transferable. Three years of consistent accounts that tie back to lodged returns. Add-backs with documents behind them. Revenue that is not dependent on the owner personally. Forward work or recurring revenue with contracts attached.
That list has not changed in twenty years. What changes with the cost of money is how much slack there is when one of those items is weak, and at the moment there is not much.
On waiting for a cut
The Board raised in May and has held twice since. I am not going to tell you what it does next, and you should be sceptical of anybody who does.
What I will say is that waiting is not free. If you hold for eighteen months to catch a lower rate, you are also betting that your earnings, your key staff, your lease position and your own appetite are all in the same shape when you get there. In my experience more sales are damaged by an owner running out of energy than by a rate cycle.
If the business is in good shape now and you want out, the question is whether the structure on offer is acceptable, not whether the timing is perfect. It never is.
Common questions
Do interest rates affect what a business sells for?
Indirectly but meaningfully. The earnings are the earnings, but the price a buyer can pay is usually limited by what they can fund, and funding cost sets that limit. When money is dearer the same business often transacts at a similar headline number with more of it deferred, or at a lower number paid entirely at settlement.
Should I wait for interest rates to fall before selling?
It is a gamble on two things at once: the direction of rates and the state of your own business when they move. Owners who wait often find their earnings have drifted in the meantime, which costs more than the rate did. The more useful question is whether the things you control, being earnings quality, owner dependence and forward work, are in the best state you can get them.
What is vendor finance and should I offer it?
It is where the seller leaves part of the price outstanding, repayable by the buyer over time, usually with interest and security. It widens the buyer pool and can lift the total price, and it puts you in the position of a lender to somebody now running the business you used to run. Whether that is acceptable is a risk decision, and the security and the terms are the whole of it.
Keep reading
All notes on selling a business · All seller guides · What is my business worth?
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