Key takeaways
- The Bank of England raised Bank Rate by 0.25 points to 4% on 5 November 2026, by an 8 to 1 vote.
- The average effective interest rate on new loans to UK businesses was 5.47% in September 2026, down from 5.57% in August, according to the Bank of England.
- Government-backed Start Up Loans of £500 to £25,000 carry a fixed 7.5% a year, repaid over one to five years.
- Funding Circle advertises business loan rates from 6.9% a year and iwoca from 1.5% per 30 days, with a representative example of 49% APR (checked 6 November 2026).
- A 0.25 point rise in Bank Rate adds about £250 a year in interest to a £100,000 variable-rate loan.
- Statutory interest on late business-to-business invoices is 8% plus Bank of England base rate.
- The next Bank Rate decision is due on 17 December 2026.
Expect to pay somewhere between about 6% and 15% a year for a mainstream UK business loan in late 2026, and much more for short-term or high-risk borrowing. The benchmark moved on 5 November 2026, when the Bank of England raised Bank Rate from 3.75% to 4%. The average rate on new loans to UK businesses was 5.47% in September 2026, before that rise.
What is Bank Rate now?
Bank Rate is 4% from 5 November 2026. The Monetary Policy Committee voted 8 to 1 for a 0.25 point rise, with Catherine Mann voting for 4.25%, according to the November 2026 Monetary Policy Summary.
The Committee said CPI inflation rose to 3.5% in September and is expected to reach about 5% by mid-2027, driven largely by higher energy prices. The next decision is due on 17 December 2026, as listed on the Bank Rate page.
What are businesses paying on new loans?
UK businesses paid an average effective rate of 5.47% on new loans in September 2026, down from 5.57% in August. The figure comes from the Bank of England’s effective interest rates release, published on 29 October 2026.
That average covers all private non-financial companies, including large firms that borrow cheaply. Small businesses usually pay more, and the September release does not split out a separate SME figure. The data also predates the November rise.
Rates by loan type and lender
Published rates are starting points; the rate you are offered depends on your credit and accounts. These figures were checked on lenders’ own pages on 6 November 2026 and are listed alphabetically after the official benchmarks.
| Loan or measure | Rate | Notes |
|---|---|---|
| Bank Rate | 4% | From 5 November 2026 |
| Average new business loan | 5.47% | September 2026, all firm sizes |
| Funding Circle term loan | From 6.9% a year | £10,000 to £750,000 |
| iwoca flexible loan | From 1.5% per 30 days | Representative 49% APR |
| Start Up Loan | 7.5% fixed | £500 to £25,000, one to five years |
Funding Circle says applicants with a poor credit history may be approved at a higher rate. iwoca says borrowing for over 12 months may carry an extra fee, typically 5% for 13 to 24 months. Check each lender’s current terms before you apply.
What decides the rate you are offered?
Lenders price each loan on risk, so two businesses can get very different rates on the same day. The main factors are:
- Trading history. Many term lenders want at least two years of filed accounts.
- Security. Loans secured on property or equipment cost less than unsecured loans.
- Personal guarantee. Most unsecured lending to small companies needs one from the directors.
- Credit files. Both the company’s and the directors’ credit records count.
- Term and size. Short, small loans often carry higher annual rates than larger, longer ones.
- Fixed or variable. Variable loans track Bank Rate, so they rose on 5 November.
How the November rise affects existing loans
A fixed-rate loan does not change when Bank Rate moves. A variable or tracker loan usually rises by the same amount from the next interest period.
On a £100,000 variable loan, a 0.25 point rise adds about £250 a year in interest. Overdrafts, revolving credit facilities and invoice finance are often priced over base rate too, so their cost moves as well. See our guide to invoice finance for how those charges work.
Which applies to you?
- If you are starting out or have traded less than five years, compare the 7.5% fixed Start Up Loan with commercial offers.
- If you have two or more years of accounts and assets to secure, ask your bank and at least one alternative lender for a secured quote.
- If you need cash for weeks rather than years, compare the total cost of a short-term loan with an overdraft or invoice finance, not just the headline rate.
- If you have a variable loan, check your facility letter for the margin over base rate and the date the new rate applies.
What to do now
- Build a cash flow forecast. Lenders ask for one, and it shows how much you really need. Our cash flow forecasting guide explains how.
- Compare APRs, not monthly rates. A monthly rate of 1.5% is more than 18% a year before fees.
- Ask about fees. Arrangement, early repayment and non-use fees change the true cost.
- Decide fixed or variable. With the Bank expecting inflation to rise into 2027, a fixed rate gives certainty.
- Charge your own late payers. Statutory interest on late business invoices is 8% plus base rate. Use our late payment interest calculator.
Our guide to business loans covers each type of finance and how to apply.
Frequently asked questions
What is the average business loan interest rate in the UK?
The Bank of England put the average rate on new loans to UK businesses at 5.47% in September 2026. Small businesses usually pay more than this all-sizes average.
What is the Bank of England base rate in November 2026?
4%, after the Monetary Policy Committee raised it by 0.25 points on 5 November 2026. The next decision is due on 17 December 2026.
What is the Start Up Loan interest rate?
A fixed 7.5% a year on loans of £500 to £25,000, repaid over one to five years, according to GOV.UK.
Will my business loan go up because of the rate rise?
Only if it is a variable or tracker loan. Fixed-rate loans keep the same rate for their agreed term.
Can I get a business loan without a personal guarantee?
Sometimes, usually for secured lending or larger, established companies. Most unsecured loans to small companies require directors to sign a personal guarantee.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.