5th August 2022

Bank of England announces interest rate increases. What does this mean for business?

what the bank of England interest rate rises mean for businesses

What’s happened?

The Bank of England has warned the UK will fall into recession at the end of 2022 after raising interest rates by the most in 27 years. Interest rates rose to 1.75% as the Bank battles to stem soaring prices, with inflation now set to hit over 13%.

The UK economy is forecast to shrink in the last three months of this year and keep shrinking until the end of 2023. Bank of England governor Andrew Bailey admitted he knew the cost-of-living squeeze was difficult but if they didn't raise interest rates, it would get "even worse".

What does this mean for businesses?

Rising interest rates will mean a vast majority of businesses having higher running costs. Some businesses have already reported that they expect their loan repayments to rise by hundreds of pounds per month.

Higher interest rates will also have an effect on new and growing businesses as banks and loan providers are more cautious about lending cash. The recent rises could make borrowing much riskier and more challenging for both businesses and lenders.

Who can help?

Now more than ever, it's important for businesses to be securing their cash flow. As lending from banks is sure to become more difficult and expensive, alternative routes to cash need to be looked at. Invoice finance is an industry that’s seen this all before.

Optimum Finance CFO Vicky Rose says "A recession will always have an impact on lenders appetites. This is a time when alternative forms of finance and business funding can really help businesses who may be struggling to generate the working capital they need for their future plans. Invoice finance is a viable funding option that can scale naturally with your business. We’ve supported businesses through recessions before and we’re well placed to do so again."

At Optimum Finance, we utilise innovative technology to offer a range of flexible funding solutions, which grow alongside your business. Get an instant estimate for the amount of funding you could access with our finance calculator. Products include invoice discounting and factoring that can boost your cashflow and give you access to a dedicated credit control team.

Email or call us to speak to our experienced team of experts and find out how invoice finance could help your business. We pride ourselves on getting things done quickly and providing access to cash within 24 hours of approval. We are passionate about finding solutions and delivering to clients’ needs.