Bank Rate stays at 3.75%: a five-point cash-flow check for UK small businesses

The Bank of England kept Bank Rate at 3.75% at its September meeting, but the decision was not unanimous. Six Monetary Policy Committee members voted to hold, while three preferred a 0.25 percentage point increase to 4%. For a small business, the useful message is not simply ‘rates are unchanged’. The meeting points to a period in which borrowing costs may stay sensitive to inflation and market expectations even without an immediate change in Bank Rate.

That matters because cash-flow plans are often built around assumptions about overdrafts, loans, deposits, supplier prices and customer demand. A held Bank Rate can therefore still be a prompt to update the numbers. The Bank’s September minutes say financial conditions had tightened, with higher market rates passing through to lending rates faced by households and businesses, while the inflation outlook had become more uncertain because of higher energy prices.

What the September decision actually says

Bank Rate remains 3.75%. The Bank reported CPI inflation of 3.1% in August and said a mechanical update to its short-term projection suggested inflation could rise to slightly above 4% in early 2027 if recent energy-price developments persisted. The MPC judged inflation risks to be tilted further to the upside, although it also noted weak activity and softer labour-market conditions that should restrain price pressures.

What are SMEs actually paying to borrow?

The latest available Bank of England Money and Credit data, covering July 2026, put the effective interest rate on new bank loans to SMEs at 6.61%, up from 6.36% in June. That is an aggregate statistical measure, not a rate that every small business can obtain. It does, however, reinforce why a 3.75% Bank Rate should not be used as the borrowing-cost line in a cash-flow model.

The same July release showed SMEs borrowed £0.8 billion net from banks and building societies during the month, after £0.7 billion in June. Businesses are still using bank finance, but the cost of that finance deserves its own assumption rather than being treated as a fixed background number.

Five cash-flow checks to make now

1. Map every rate-sensitive liability

List overdrafts, revolving credit, business loans, asset finance and any other facility that can reprice. Record the reference rate, margin, reset date, maturity date and current outstanding balance. Some products move with Bank Rate, some use another reference, and some are fixed. The purpose is to replace a broad assumption such as ‘interest rates are 3.75%’ with the actual contractual mechanics of each facility.

2. Stress-test the next six months

Run at least a base case and a tougher case for October to March. The tougher case should allow for higher borrowing costs where facilities can reprice, higher energy or supplier costs, and slower customer receipts if your sector is exposed to weaker demand. This is not a forecast of what the MPC will do; it is a test of whether the business still has enough headroom if conditions are less favourable than expected.

3. Review what spare cash is earning

Bank Rate also influences savings rates. If the business holds more cash than it needs for immediate working capital, compare the rate and access conditions on business deposit products. Keep liquidity first: VAT, payroll, rent and supplier payments should not be locked away simply to chase a higher headline return. Separate operational cash from genuine surplus cash before making any change.

4. Recheck margins, not just finance costs

The September MPC discussion was dominated by energy-price uncertainty. That means the cash-flow effect may arrive through supplier bills and margins as well as bank interest. Review recurring costs that renew this autumn, identify where increases can be absorbed and where pricing may need to change, and avoid using last winter’s energy or delivery assumptions automatically in a 2027 budget.

5. Put the next decision in the diary, but do not build the plan around a prediction

The next scheduled MPC decision is 5 November 2026. The September vote shows there is disagreement inside the Committee, and the Bank has made clear that the outlook can change materially as energy prices and inflation evolve. A small business generally has more control over its liquidity buffer, invoicing discipline, financing mix and cost assumptions than over the next Bank Rate decision. Build the cash plan around those controllable items.

A simple finance-team action list for this week

1. Export a current list of loans, overdrafts and other finance facilities, including rates, margins, balances and renewal dates.
2. Update the cash-flow forecast through at least March 2027 with a separate downside case for borrowing and input costs.
3. Check the return and notice terms on business cash balances without compromising payroll, tax or supplier liquidity.
4. Review autumn contract renewals and supplier notices for energy-sensitive cost increases.
5. Set a reminder to revisit financing assumptions after the Bank of England’s 5 November decision and after the next business lending data release.

The September decision is therefore best treated as a cash-flow review trigger, not as a signal to rush into or out of borrowing. The policy rate is unchanged, but the Bank’s own data and commentary show that the financing environment faced by businesses can move even between MPC decisions. Keeping the forecast tied to actual facility terms, invoice timing and cost commitments is more useful than trying to guess the next quarter-point move.