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Blinded by the rates: Are businesses missing finance opportunities?

Paul Trickett from Bathgate Business Finance asks if too much focus on interest rates is blinding business owners to finance opportunities.

Right now, interest rates are a key focus for businesses, having seen them rise significantly since 2021, in the wake of historic lows of 0.1% during the pandemic. The base rate currently sits at 5.25%, with the next Bank of England Monetary Policy Committee meeting due to take place on 21st September, and analysts predicting a rise to 5.75% in 2023.

It’s not surprising that businesses are finding this alarming. Higher interest rates increase the cost of lending, and many may be worried about servicing existing debt, not to mention increased overheads and cost of materials, goods, and services.

But is an undue focus on interest rates alone actually blinding businesses owners to the options that are actually out there?

Since the financial crash of 2008, interest rates had been kept at a historic low for a long period of time. But we forget that prior to that, interest rates regularly hovered between 4% – 6% and this was considered steady and normal after the turmoil of the 1980s and 1990s, when rates were regularly above 10% and even hit peaks of 17%.

Business owners traditionally turned to banks for lower rates, with secondary independent lenders, whose rates would be higher, being the next point of call should the bank decline to lend.

But now that dynamic has shifted, the wider choice of funding solutions available in the marketplace has created a greater level of flexibility for business owners. Whilst the high street banks remain the primary point of call, increased consideration has been given to funding offered by the challenger banks and independent finance houses.

At Bathgate our opinion is that interest rates are actually irrelevant if a business is not getting what it needs. Independent lenders and challenger banks are increasingly able to offer competitive terms to business owners, which are tailored to specific needs and flexible to allow facilities to grow and shift with a business over time.

This is exactly why we work to challenge the gloom and concern around interest rates. Interest rates are interest rates and there is nothing we can do to change them, what is within our control is seeking out the best terms and most suitable lending partner for your business.

This doesn’t just have to be your bank anymore. The market is extensive and while banks should always be considered, there is no need to compromise if terms don’t meet your requirements.

The market has grown so much that it can be confusing and overwhelming, which is why businesses like Bathgate exist to help take you through the process of doing a whole market search, identifying the options available and finding the most appropriate and beneficial solution.

While high street banks will always play a huge part in that market, there are occasions when a business may need to consider alternative lenders

  • Greater chance of approval – challengers/independents are unlikely to have the debt service challenges which can often hamper banks especially when taking into consideration government loans BBL, CBILS or CLBILS
  • Loan-to-value (LTV) – potential to offer a higher LTV which means more cash out, especially in relation to property deals
  • Competitive terms – traditional lenders might often be limited to 10 – 15-year terms, while alternative funders may have scope to offer up to 25 years
  • Speed – challengers can be more nimble and get money to you faster
  • Product variety – greater options and more frequent new products as they are more able to respond quickly to the changing market
  • Flexibility around personal guarantees – can be as low as 25% per director (dependent on the product)
  • Scope to extend and adapt – less rigid in process so existing facilities can be adapted and extended as business changes and grows, which creates a long-term relationship
  • More options for ‘high-risk’ sectors – independents and challengers are less risk averse and will be more likely to offer solutions for sectors deemed higher-risk, such as construction, retail, and hospitality

While there is no doubt that things are challenging for businesses right now, it’s important that doom-mongering doesn’t create an obstacle to success and that opportunities aren’t missed.

Financial brokers like Bathgate have an important advisory role in helping clients see through the gloom and guiding them to the positive solutions that are out there, supporting economic recovery and business growth. Maybe it’s time to stop being blinded by the rates and start seeing what else is out there – we think you’ll be pleasantly surprised!

To discuss your business finance options please contact Paul Trickett on 07469140180 or email