Small businesses could be stung with £355 million of extra interest payments if rates rise by 0.25 percent, new research has claimed.
The research by debt adviser Hadrian’s Wall Capital shows that SMEs would be liable for an extra £355 million in interest payments in the first year if rates increased by a quarter. If rates increased by a full percentage point SMEs would see a £1.4 billion jump in interest payments in the first year. Since the Bank of England increased interest rates last November, there has been much speculation that a further hike could be on the horizon. As small businesses struggle with the high inflation and business rates, a further jerk on their purse strings could leave many business owners vulnerable.
Hadrian’s Wall Capital, who conducted the research, said that SMEs will be hit hard by a rate rise because of a lack of fixed-lending available to them, with only 16 percent of the £24 billion loaned to them currently on a fixed rate.