Ahead of the Bank of England’s next rate decision, rebuildingsociety.com on what ‘higher for longer’ really means for small business borrowing
With the Bank of England’s Monetary Policy Committee due to announce its next interest rate decision on 30 July, having held Bank Rate at 3.75% since a cut last December, in our experience as a Leeds-based lending platform, small businesses shouldn’t assume a stable base rate means stable borrowing costs on the ground.
The Bank of England has held Bank Rate at 3.75% at its last three scheduled decisions, with the Monetary Policy Committee split over whether the next move should be a hold or a rise, amid mixed signals on inflation. For small businesses, the headline rate is only part of the picture: the cost and availability of finance also depend on how individual lenders price risk, and on the wider trading conditions a business is operating in.
“A lot of business owners assume that if the Bank Rate holds steady, their own borrowing costs will too. It’s more complicated than that. What actually determines whether a loan is affordable is the health of the business itself, and that’s shaped by costs, wages and demand just as much as by what the Bank of England does on a Thursday.”
Daniel Rajkumar, Founder & CEO, rebuildingsociety.com