With the news last week that the base rate has been increased for the first time in 10 years it is important to assess how this might impact your business. In this article we consider the possibilities.
The base rate is the rate the Bank of England charges banks and other lenders when they borrow money. Therefore, this often influences the interest rates that lenders charge for mortgages, loans and other types of credit they offer.
Last week the Bank of England announced that the base rate would rise from 0.25% to 0.5% with immediate effect.
How will the interest rate rise impact my business?
This increase in interest rates could affect your business in three ways:
- Customers with debts may have less disposable income to spend because they are paying higher mortgage payments. This could mean that your sales fall as a result, particularly if you are in a market that is perceived as non-essential, such luxury goods or services.
- Firms with overdrafts may incur higher borrowing costs because they may need to now pay more interest.
- Bank loans and finance may become less attractive with higher rates available, or with criteria meaning lower rates are more difficult to secure.
Looking on the positive side
Despite the increase, the base rate remains at a historically very low level. Before the financial crisis in 2008 it had hovered between 3.75% and 7.5% for two decades, whilst back in January 1985 it hit a historic high of 14%.
So perhaps 0.5% doesn’t seem so bad.
Can you beat the rise?
With borrowing rates potentially increasing, it becomes more important to shop around when looking to take out a loan or borrow finance for your business. This is where we can help.
With good relationships with multiple lenders we can take the strain off of your shoulders to find a competitive finance option for you.
There is no need to complete multiple forms or applications to find suitable finance. Our simple application form can be completed in minutes so that we can begin seeking a suitable finance provider for you.
Contact our experienced finance team
If you would like to discuss how we can help you find finance for your business you can contact us 7 days a week, or request a call back via the form on this page.