Research from insolvency firm Begbies Traynor found that, at the end of Q3 2017, close to 250,000 of the companies surveyed ended the quarter with a negative net worth, but have survived thanks to the prolonged low interest rate environment and flexible labour market.
Whilst an increase in the interest rate will affect these companies the most, the interest rate rise could well put a temporary strain on all businesses. Costs may increase and they may have temporary need for cashflow while they work out how to pass these costs on, increase efficiencies or invest so their business can cope with any price rises.
The rise in the interest rate is further impacted with more than 56,000 small businesses in England set to face steep tax rises next year. Business rate increases will total £152m in April, according to rates specialist CVS, putting a heavier burden on firms already suffering from rising inflation.
What can smaller businesses do?
So with the Monetary Policy Committee voting 7-2 to increase interest rates to 0.50% today (November 2), what can small businesses do to ease these pressures?
For Britain’s smaller businesses, asking their bank for money is an experience they’d rather not repeat. If you’re running a small business, dealing with a bank can be a frustrating experience. Even though the money is useful, it can feel like the pain outweighs the gain.
That’s why smaller businesses apply for funding less often than they should. And why some don’t apply at all.
Our Business Development Loan helps smaller businesses drive growth and finance development. It can help your business raise the capital required to cover a range of costs over a loan period between 12 months and 3 years*.
If business prefer borrowing over a smaller term, our short-term business loans can help cover specific business purposes and enable essential costs to be spread over a 3 to 12-month term.
An interest only loan enables costs to be spread over a 3-month period. This is an injection of money into your business cash flow, requiring only interest to be repaid at the end of months one and two. This is then followed by a final repayment of interest along with the full balance.
At White Oak UK we believe it is vital that smaller business get the finance they need, as managing director, Peter Alderson explains:
“We have to ensure that smaller businesses have access to not only the finance options they need, but that they understand what is available to them.”
*Professional practices qualify for our maximum term of 5 years.
