The Bank of England has held the base rate at 5 % for months, and the impact on small businesses is brutal. Commercial borrowing costs now sit between 7 % and 9 % for most SMEs. Loan defaults are up 12 % this year alone, according to the latest BVA BDRC SME Finance Monitor. Many members can’t refinance existing debt, let alone take on new borrowing to buy equipment, stock, or hire staff.
For a typical £100,000 loan, that’s an extra £4,000–£6,000 a year in interest compared to pre-2022 rates. That’s money that could pay a salary, upgrade machinery, or survive a quiet quarter. Instead it disappears to the banks.
We need a new £2 billion British Business Bank fund offering fixed 2–3 % loans over five years, targeted exclusively at SMEs. This isn’t charity; it’s the same low-cost lending that helped Britain recover after the 2008 crash and during Covid. It worked then and it will work now.
High street banks won’t lend below 7–9 % because they can make safer money elsewhere. The British Business Bank exists for exactly this moment, to step in when the market fails small firms.
Give SMEs breathing space and watch investment, hiring, and growth return. Keep rates at these levels and more businesses will simply stop trying.
The 1832 Club is fighting for these changes. The more members we have, the louder our voice in Westminster.
Join today from just £5/month or £40/year and help to support pro-SME candidates.
Together we can make a difference.