1 month ago
In June 2023, Prime Minister Rishi Sunak encouraged borrowers to remain steadfast as the Bank of England (BoE) base rate hit 5%. In early August, the BBC reported that the BoE had pushed that number up to 5.25% after six of a nine-member panel had voted in favour. This rise equals April 2008, when the UK economy plunged into recession.
Earlier in the summer, Rishi Sunak had emphasised the importance of ‘holding our nerve’ and sticking to the plan to overcome inflation challenges. He reassured the British public that the BoE's actions, aimed at addressing the current UK inflation rate, have his full support.
While acknowledging the difficulty of the situation, Sunak expressed confidence in his plan to navigate through trying times. The PM believes raising inflation rates is the right approach, drawing from historical evidence supporting this strategy. However, he also recognises that this will put pressure on borrowers.
“Don't expect rates to fall any time soon, but they may not go up much more from here. That is indicated by the Bank of England's important new language today.” wrote BBC Economics Editor Faisal Islam.
Another base rate increase essentially means it will be more expensive for individuals or businesses to borrow money. The BoE has taken this decision to incentivise businesses to save money instead of taking out business loans or mortgages. When spending on goods and services decreases, the price of these finance products generally drops. The theory is that a slower pace of price rises will contribute to a lower inflation rate in the long term.
However, this doesn’t mean lending is out of the question for businesses in the UK. But it does mean that finding the best finance options is even more vital to secure the lowest rates available.
Enhanced borrowing capacity: Business loans allow you to access more funds than credit cards. This proves beneficial when financing sizeable purchases or targeting extensive growth.
Extended repayment periods: Business loans generally come with longer terms than credit cards, granting you additional time to repay the loan and facilitating better cash flow management.
Stable interest rates: Certain loans offer fixed interest rates, ensuring a predictable monthly interest payment. This can aid your business budgeting and financial planning.
Versatility: Business credit cards offer more flexibility, enabling your business to finance expenses, inventory and purchases like marketing costs easily.
Ease of Use: Business credit cards are a flexible finance solution, enabling you to conveniently use them almost anywhere without the hassle of carrying cash or dealing with more complex payment methods and bank details.
Rewards and Incentives: Numerous credit card providers offer enticing rewards programmes, allowing you to save on travel expenses or earn cashback while covering your business expenditures.
At BusinessComparison, we provide expert guidance to help you discover the most suitable loans for your business. Our extensive comparison encompasses many finance solutions, from established high-street banks to small lenders.