Small business loan rates eased in September. Small firms paid an average of 6.55% on new bank loans, down from 6.63% in August. The figures come from the Bank of England's Money and Credit release, published on 29 October. Large businesses paid less and borrowed far more.
01The September figures
According to the Bank of England, small and medium-sized businesses borrowed £1.0 billion, net, in September. That was the same as in August.
Large businesses borrowed £8.2 billion, up from £3.7 billion the month before.
Borrowing by small and medium-sized firms grew by 5.3% over the year, up from 4.7%. Borrowing by large firms grew by 11.7%.
The average rate on new loans to all businesses fell to 5.47%. That is about one percentage point below what small firms paid.
02Small business loan rates: why the average is not your rate
The 6.55% figure is an average across all new loans to small and medium-sized businesses. The rate you are offered depends on your own business.
Lenders look at your trading record, your profit and cash flow, any security and the size and term of the loan. Two businesses applying in the same week can get very different offers.
So the average is a guide, not a quote.
03What to do before 5 November
Bank Rate is 3.75%. The Bank of England's next decision is due on 5 November.
If you are comparing offers, check whether each rate is fixed or variable. A variable rate can move when Bank Rate moves. A fixed rate stays the same for the agreed term.
Have your latest accounts, a cash flow forecast and a clear plan for the money ready. That puts you in a stronger position whatever the decision.
If you are planning to borrow to grow, talk to us about business growth finance. We can look at the deal across a wider range of lenders.
The next Money and Credit release is due on 30 November.
