The Bank of England held Bank Rate at 3.75% on 18 June 2026, so if you borrow to run your business, the cost of base-rate-linked finance is not moving this month. The Monetary Policy Committee voted 7 to 2 to keep rates steady. Two members wanted a rise to 4%.
For most small firms, that means no immediate relief, but no fresh increase either. The next decision is due on 30 July 2026, so this is a pause rather than a guarantee.
The wider picture is mixed. CPI inflation was 2.8% in May 2026, and the Bank expects it to rise later in the year as higher energy prices continue to feed through. The economy is also soft. UK GDP rose in the first quarter, but monthly GDP fell by 0.1% in April. That tension, sticky inflation against weaker demand, explains why the Bank held rather than cut or raise. You can read the Bank’s latest position in its June rate decision.
What the hold means for your borrowing
Not every type of finance responds in the same way. If you have an overdraft or loan linked directly to Bank Rate, your rate should stay where it is for now. If you are shopping for a new fixed-rate business loan, the pricing depends more on lender margins, swap rates, credit risk and your financial records than on the base rate alone.
| Type of borrowing | What the June hold means |
|---|---|
| Overdrafts and base-rate-linked loans | No automatic increase from this decision |
| New fixed-rate business loans | Pricing depends on market rates, lender appetite and your risk profile |
| Credit cards and merchant cash advances | Usually unchanged, and still expensive for day-to-day funding |
| Invoice finance and asset finance | Depends on the facility; base-linked products hold steady |
| Existing fixed-rate loans | No change until your deal ends |
Whatever you use, the value of cash flow forecasting rises when rates are flat but uncertain. You want to know what a quarter-point move in July, September or later in the year would actually cost your business.
A worked example
Say you run a small building firm with a £60,000 variable business loan linked to Bank Rate. At 3.75% plus your lender’s margin, your interest cost stays steady after the June decision. If the Bank had raised rates to 4%, that quarter-point rise would add about £150 a year for every £60,000 borrowed.
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That sounds small, but it stacks up across an overdraft, van finance, card balances and supplier credit. It also affects how your figures look depending on whether you use cash basis or traditional accounting, because interest and finance costs are recognised differently.
Getting ready to borrow
Lenders are cautious in a flat but uncertain rate environment. Clean, current records matter. If you plan to apply for funding, most lenders will want recent accounts, bank statements, tax records, management figures and sometimes VAT return support records. Keeping your books tidy and filing everything on time makes approval faster and can help you access better terms.
For sole traders, this overlaps with the shift to Making Tax Digital for Income Tax, which changes how income and expenses are reported. Sorting your sole trader accounting now puts you in a stronger position when you ask for credit.
If you employ people, steady outsourced payroll keeps one more cost predictable. The wider tax changes from the Autumn Budget 2025 feed into borrowing decisions too, and clients across Slough and our accountants in Reading office often ask us to model all of this before they commit.
Frequently asked questions
What is the current Bank of England base rate?
Bank Rate is 3.75%, held on 18 June 2026. The next decision is due on 30 July 2026.
Is the base rate likely to fall in 2026?
It is uncertain. Inflation is expected to rise later in the year, while the economy is showing signs of weakness.
Does the base rate affect my business loan?
Yes, if your loan or overdraft is linked to Bank Rate. Fixed-rate borrowing is priced differently and depends on market rates and lender criteria.
Should I fix my business borrowing now?
There is no single answer. It depends on your margins, cash flow, debt level and how much certainty you need.
Plan around the pause
A flat rate is a useful moment to review your finance before the next meeting changes the maths. Speak to the small business accountants in Slough at Asmat & Co and we will help you weigh your options with real numbers. Get in touch today.
Need Help With Your Accounts Or Tax?
Whether you need support with self assessment, VAT returns, payroll, bookkeeping, CIS, company accounts or corporation tax, Asmat & Co Accountants can provide clear, practical advice for your business or personal finances.
