As Australia’s Federal Budget is set to be announced on March 25, small and medium-sized businesses (SMEs) are bracing for announcements that could significantly impact their operations.
The ongoing challenges of inflation, high interest rates and staff shortages, combined with ATO Debt recovery efforts have compounded, creating a tough economic environment for many SMEs and this year’s budget may very well determine the future success of many SME businesses.
According to Guy Callaghan, CEO of leading non-bank lender Banjo Loans, the Federal Budget is a key moment for SMEs across the country.
“While specifics won’t be confirmed until the Budget is announced, I would suggest that understanding the potential implications of key measures is essential for business owners,” Callaghan said.
Below are some key insights and recommendations from Banjo Loans on what small businesses should be watching closely in the 2025 / 26 Federal Budget:
- Financial Support for SMEs
Government support for small businesses has been critical in recent years, with rebates, grants and other important financial incentives providing essential relief.
“Last year, eligible SMEs received a $325 rebate on electricity bills and we hope to see similar support measures in 2025,” said Callaghan.
“Given the pressure many small businesses face in managing rising operational costs, continued financial assistance would provide significant help in easing cash flow challenges.”
Expanded support through rebates, grants and vouchers could allow SMEs to better manage their expenses and focus on long-term growth. As such, keeping an eye on any announcements related to financial support will be crucial for SMEs planning their budgets for the coming year.
- Interest Rate Relief
With the Reserve Bank of Australia’s ongoing efforts to control inflation, the impact of rising interest rates continues to be felt across many sectors. Despite the most recent 0.25% drop-in interest rates announced by the RBA in February, the cost of borrowing remains a significant concern for SMEs, particularly for those relying on loans to fund expansion or manage cash flow.
“In the upcoming Budget, we would like to see targeted measures aimed at easing the burden of these higher borrowing costs.
“This could include low-interest loans or grants for innovation. Any support in this area would be a welcome relief for SME businesses looking to expand or invest during this period of economic uncertainty,” Callaghan said.
“We are also hopeful that the Government restrains spending to avoid inflaming further inflation. After 13 rate rises since May 2022, we’ve started to see inflation settling down. While we understand spending is required, we are hopeful the government with this Budget considers the impacts overspending will have on inflation, on families, on SMEs and on all business and the wider economy in Australia.”
- The Impact of Wage Theft Legislation
As of January 1, 2025, the criminalisation of wage theft came into effect, meaning intentional underpayment of employees will now be considered a criminal offence. This new law places greater responsibility on small business owners to ensure their payroll processes are compliant.
In response, the government has introduced the Voluntary Small Business Wage Compliance Code, which offers clear guidelines for small businesses to meet their obligations and avoid penalties.
“We hope that the government will continue to provide resources to assist SMEs in adapting to the new wage theft legislation requirements and help them to manage any potential compliance challenges. A focus on education and support would be invaluable for small business owners navigating these changes,” said Callaghan.
- Transitioning to Digital Payments
As Australia aims to completely phase out cheques by 2030, many SME businesses will need to complete their transition to 100% digital payment methods.
The government has been working to support businesses through this shift, but additional assistance will be necessary to ensure smooth adaptation.
“We’d love to see the Budget include measures aimed at helping small businesses with the transition to totally digital payments and Open Banking,” Callaghan said.
“Support in the form of grants or resources for businesses to adopt digital payment systems could help to speed this process up and reduce the reliance on outdated cheque payments, keeping SMEs in line with future industry standards.
“Also, providing considered and meaningful incentives, which might make Open Banking a more viable opportunity and allow SMEs more control of their banking data, affording them more and better choices when it comes to borrowing, spending and financial management.”
- Support for Innovation and Workforce Development
Innovation and workforce development are crucial for SMEs looking to remain competitive in a rapidly changing market. In the lead up to the Budget announcement, there are expectations that the government will continue funding initiatives that support technological advancement and skills development.
“Whether through grants for business innovation or funding for upskilling programs. These types of initiatives can help SMEs evolve with the market. And we believe that by supporting businesses with the tools and training they need to adapt, there will be benefits to everyone, especially when it comes to long-term sustainability and growth of Australian business,” said Callaghan.
Looking Ahead: Be Prepared for 2025
The 2025-26 Federal Budget will shape the landscape for small businesses in the coming year. From financial relief and interest rate support to navigating new legal obligations, it is important for SMEs to stay informed and ensure they adapt to the changing environment.
“As the Budget gets very close, we encourage all SME businesses to take some time to review your business plans and ensure you’re prepared for any new initiatives that could help you succeed in the year ahead,” Callaghan ended.
