The Bank of England recently announced a drop in the UK base interest rate, with a drop from 4.75% to 4.5%. The final impact of this drop can be both positive and negative for your small business, so it’s worth understanding the effect that interest rate changes can have.
Let’s take a look at how a drop in interest rates may affect your finances.
Lower interest rates on loans: This directly translates to lower interest payments on your existing loans and potentially more favourable interest rates on any new loans you take out.
Increased access to credit: With lower borrowing costs, you may find it easier to secure financing for expansion, investment in new equipment, or to overcome and present challenges.
Reduced debt service: Having lower interest payments frees up cash flow. This can be used to reinvest in the business, used for marketing, or distributed to shareholders.
Increased consumer spending: Lower interest rates help to stimulate consumer spending. This can mean increased demand for goods and services, higher sales and boosted revenues.
Lower cost of capital: With cheaper borrowing costs, you can invest in growth, including research and development, technology upgrades or hiring new staff.
Increased confidence: Lower interest rates can boost investor confidence. This makes it easier for you to find investors and raise capital through equity financing.
Stimulate the economy: Lower interest rates can boost economic growth by encouraging borrowing, investment and consumer spending. This creates a more favorable environment for your businesses to thrive in. A stronger economy = a more stable future.
Investing in the future of your business is a vital step. With interest rates currently lower, now could be the time to think about borrowing and putting your 2025 strategy into action.
Talk to the team about your growth plans and how these interest rate changes may impact your business. We’re here to help you reinvest, grow and keep on evolving. Call us on 01904 787 973 or
book a discovery call with Donald Inglis.
If you’d like to improve your company’s financial performance, or don’t feel you’re getting enough support from your current accountant, book your free discovery call with us today.
Contact
3 Westfield House
Millfield Lane
Nether Poppleton
York
YO26 6GA
01904 787 973
Inglis Chartered Accountants is rated 5 out of 5 based on 43 Google reviews.
© 2025 Inglis Chartered Accountants Privacy Policy Client Login Design by Noir