Bank Rate held at 3.75%: what the September decision means for business loans

This article is for business owners with variable-rate borrowing, or who are planning to borrow, and want to know what the Bank of England's latest decision means for them. Bank Rate drives the cost of much business finance, from commercial mortgages to revolving credit. Below we set out what the Bank decided, why, and how to think about fixed and variable rates now. Smart Funding Solutions is a broker, not a lender: we compare whole-of-market options across 300+ lenders, arranging funding from £10,000 to £20 million.

01What the Bank of England decided

In its September 2026 Monetary Policy Summary, published on 17 September, the Bank of England's Monetary Policy Committee (MPC) voted by a majority of six to three to keep Bank Rate at 3.75%. The three members in the minority, Megan Greene, Catherine L Mann and Huw Pill, voted to raise it by a quarter point to 4%.

Six members, including Governor Andrew Bailey, voted to hold. The Committee also held Bank Rate at 3.75% by six votes to three at its previous meeting in July.

02Why rates were held and not cut

The Bank pointed to energy prices. It said protracted conflict in the Middle East has contributed to further increases in crude and refined energy prices, which remain higher and more volatile than before the conflict began. As a result:

• CPI inflation rose to 3.1% in August and is likely to rise further over coming quarters, to around 3.75% in the fourth quarter of 2026.
• The MPC said there has been little evidence so far of material second-round effects in prices and wages, but the risk grows the longer energy prices stay high.
• It judged that the risks to the inflation outlook are tilted to the upside, and said it stands ready to act as necessary to bring inflation back to the 2% target.

The Bank also noted that the economy grew by 0.4% in the second quarter of 2026, and that soft labour market conditions and higher interest rates faced by households and businesses should weigh on inflation over time.

03What it means for business loan pricing

Not every type of business finance moves with Bank Rate in the same way:

• Variable-rate borrowing, such as many commercial mortgages, revolving credit facilities and invoice finance facilities, is usually priced as a margin over Bank Rate or a similar benchmark. A hold means your rate stays the same for now.
• Fixed-rate term loans, including most unsecured business loans and asset finance agreements, are priced when you sign. Existing deals are not affected, but new offers reflect where lenders expect rates and funding costs to go.
• Short-term products, such as bridging loans and merchant cash advances, are priced mainly on risk and term, so Bank Rate is only one part of the cost.

With three MPC members voting for a rise, there is a real possibility that the next move could be up rather than down. That uncertainty can feed into the price of new fixed-rate deals. Our guide to business loan interest rates explains how lenders set them.

Remember that Bank Rate is only the starting point. The margin a lender adds depends on your trading history, credit record, security and the purpose of the loan, and arrangement fees can add significantly to the total cost. Two businesses borrowing the same amount on the same day can be offered very different prices.

04Fixed or variable: how to decide

There is no single right answer, but a few questions help:

• How much could you absorb? If a rise of a quarter or half a point on a variable loan would strain your cash flow, the certainty of a fixed rate may be worth paying for.
• How long do you need the money? Fixing for a long term locks in today's pricing, but early repayment charges may apply if you want to clear the loan sooner.
• What are you borrowing for? Working capital that you repay quickly is less exposed to rate changes than a long property loan.

Use our business loan calculator to see how repayments change at different rates, or our commercial mortgage calculator for property borrowing.

05Should you refinance now?

If you took out a fixed-rate loan when rates were higher, or you have several expensive short-term facilities, it may be worth comparing what is available now rather than waiting for a cut that may not come soon. Refinancing business loans and debt consolidation loans explain how switching works. Always check early repayment charges on your current deal and compare on the total amount you would repay.

06What to watch next

The Bank of England's published MPC dates put the next decision on Thursday 5 November 2026, alongside the November Monetary Policy Report and its updated forecasts. The final decision of the year is due on 17 December.

Whatever happens next, the price you are offered depends on your business as much as on Bank Rate, and it varies widely between lenders. Get your Instant Quotes to see your lender matches instantly, with no credit check. Lenders make every decision, and all finance is subject to status.