The Current Rate Environment
The Bank of England has maintained elevated interest rates throughout 2024 as it continues to tackle inflation. For businesses seeking finance, this has had a significant impact on borrowing costs across every product category - from commercial mortgages to unsecured business loans.
While the headlines focus on base rate announcements, the reality for business borrowers is more nuanced. Lenders price risk individually, and a well-structured application presented by an experienced broker can still secure highly competitive terms even in this environment.
Which Products Are Most Affected?
Variable rate products - particularly revolving credit facilities and some invoice finance arrangements - have seen the most immediate impact as rates have risen. Fixed rate products, such as many commercial mortgages and asset finance agreements, have seen more modest increases.
Commercial Mortgages
Commercial mortgage rates have risen but remain below the peaks seen in some previous cycles. Lenders are competing actively for quality deals, and there is still a strong appetite for well-secured commercial property lending.
Asset Finance
Hire purchase and finance lease rates have increased modestly, but asset finance remains one of the most cost-effective ways to fund equipment purchases.
Unsecured Business Loans
Unsecured lending has seen the most significant pricing increase. However, for businesses with strong trading performance and clean credit histories, competitive rates are still available.
What This Means for Your Business
The most important steps businesses can take in a rising rate environment are to plan ahead, understand their options and work with a broker who has access to the full market. At ABL, we work with over 100 lenders to find the most suitable facilities for our clients. Contact one of our team today.