Will interest rates go up on 5 November 2026? What a rise to 4% means for business loans

The Bank of England announces its next decision on Bank Rate at noon on Thursday 5 November 2026, and most economists now expect the first rise in more than three years. Bank Rate has been 3.75% since the September decision, when three of the nine members of the Monetary Policy Committee already voted to go to 4%. Here is what is expected, why, and what a quarter point rise would mean for the cost of a business loan. Smart Funding Solutions is a broker, not a lender. We compare whole of market options and arrange business finance from £10,000 to £20 million.

01Will the Bank of England raise interest rates on 5 November 2026?

It looks likely. The Bank published its 2026 meeting dates in advance, and 5 November is one of the four meetings that come with a full Monetary Policy Report and new forecasts. A Reuters poll reported by Sovereign Magazine on 28 October found 54 of 63 economists expecting a rise from 3.75% to 4%. A month earlier, most forecasters expected rates to stay on hold for the rest of the year, so the mood has turned quickly.

Nothing is certain until the announcement. The Committee votes on the day, and it has held at 3.75% for several meetings in a row. But the direction of travel is clear, and a business that is about to borrow should plan on the basis that variable rates could be a quarter point higher by Friday.

02Why are interest rates expected to go up?

Inflation is moving the wrong way. The ONS consumer price inflation release of 21 October showed CPI at 3.5% in September 2026, up from 3.1% in August. The biggest push came from transport, with motor fuel prices up 29.8% over the year. Core inflation, which strips out energy, food, alcohol and tobacco, rose to 2.8%. Our earlier report on inflation rising to 3.5% sets out the detail.

The Bank's target is 2%. In September it expected CPI to rise to around 3.75% in the final quarter of 2026 and to go slightly above 4% early in 2027. The members who voted to hold were open about what would change their minds. Governor Andrew Bailey said that if the conflict pushing up energy prices persists, "it is likely that policy may have to tighten", and other members said the case for a rise was building. When rising fuel costs start feeding into wages and other prices, the Committee usually moves.

For background on the September decision itself, read Bank Rate held at 3.75%, and for how lenders were already tightening, see the Bank of England Credit Conditions Survey for the third quarter.

03What interest rate are small businesses paying now?

The Bank's Money and Credit release for September 2026, published on 29 October, puts the effective interest rate on new bank loans to small and medium-sized businesses at 6.55%, down from 6.63% in August. For all private non-financial companies, which includes large ones, it was 5.47%. Small businesses borrowed £1.0 billion net from banks in the month, and the annual growth rate of their borrowing rose to 5.3%.

That 6.55% is an average across secured and unsecured, short and long, strong and weaker borrowers. Asset-backed and property-backed lending often prices below it, while unsecured and short-term lending from alternative lenders prices above it. Our business finance rate index and business loan interest rate guide show the published ranges by product, and what a business loan really costs covers the fees that sit on top of the rate.

04How much would a rise to 4% add to a business loan?

A quarter point rise adds £250 a year in interest for every £100,000 of variable-rate borrowing that tracks Bank Rate, before any change in the lender's margin. So the extra cost works out roughly like this.

• £50,000 variable loan. About £125 a year, or around £10 a month.
• £250,000 variable facility. About £625 a year, or around £52 a month.
• £1 million commercial mortgage on a tracker. About £2,500 a year, or around £208 a month.

Those figures are small next to the price differences between lenders, which is the more important point. Two lenders quoting on the same deal can be several percentage points apart once fees are included, so shopping the market is worth far more than timing it. Use the business loan calculator or the commercial mortgage calculator to run your own numbers, and see how much your business can borrow before you apply.

05Does a Bank Rate rise affect fixed-rate business loans?

No. A fixed-rate loan you have already signed stays at the agreed rate for the fixed period. Most unsecured small business loans, hire purchase and leasing agreements are fixed, so existing repayments do not change.

The products that move are those priced as a margin over Bank Rate or SONIA. That usually means revolving credit facilities, overdrafts, tracker commercial mortgages, invoice discounting and many bridging loans on variable terms. Check your facility letter for the words base rate, Bank Rate or SONIA to see which of yours will rise.

New fixed-rate quotes can still change, because lenders price new fixed deals off market rates, and those markets have already priced in a rise. A quote issued last month may not be held if you have not accepted it.

A quarter point rise adds £250 a year in interest for every £100,000 of variable-rate borrowing that tracks Bank Rate, before any change in the lender's margin.

06Should I borrow before the rate decision?

Do not rush a decision you would not otherwise make. A quarter point is modest, and the right product and lender matter far more than which side of Thursday you sign. But if you were already planning to borrow and have a quote you are happy with, there is little to gain by waiting, because the next move after this one is more likely to be up than down if inflation keeps rising.

If you have variable debt, this is a good moment to look at the whole picture. Several short-term facilities can sometimes be replaced with one fixed loan through debt consolidation, and older facilities can be moved to better terms with a business loan refinance. Property owners can compare a fixed commercial refinance. Businesses with equipment can release cash through asset refinancing at fixed rates.

07Which types of finance are least affected by rate rises?

• Fixed-rate term loans. Unsecured business loans and secured business loans on a fixed rate keep the same repayment for the term.
• Asset finance. Asset finance agreements are nearly always fixed when you sign, and the asset itself is the security.
• Government-backed lending. Loans under the Growth Guarantee Scheme are offered by accredited lenders at fixed or variable rates, so ask which you are being quoted.
• Revenue-linked finance. A merchant cash advance charges an agreed fixed fee rather than interest, so Bank Rate does not change what you repay once it is agreed, though it is usually dearer overall.

Cash flow pressure from higher fuel and energy bills is often the bigger problem than the rate itself. Working capital loans and invoice finance can smooth the gap while costs settle.

08What does a rate rise mean for your funding?

Lenders will still lend after 5 November. Business borrowing from banks has been growing, and a quarter point rise does not change the appetite of most lenders for a sound application. What changes is the cost of variable debt and, at the margin, the affordability tests lenders run, since a higher rate means a lower amount covers the same repayment. A business close to the limit on interest cover may find the maximum loan falls a little.

The practical steps are simple. Know which of your facilities are variable, get a current quote rather than relying on one from last month, and compare more than one lender. Get your Instant Quotes to see your lender matches instantly, with no credit check, then a broker searches the wider market for you. Read how Instant Quotes work if you have not used it before. Lenders make every decision, and all finance is subject to status.