The Bank of England has raised Bank Rate from 3.75% to 4%. For small businesses with borrowing, the useful next step is to establish which agreements can change, when the change takes effect and what it means in pounds for the cash forecast.
The decision, announced on 5 November, marks a change from the earlier period of unchanged rates. It does not mean every business loan immediately becomes a quarter of a percentage point more expensive. Your agreement and the lender’s notification determine the effect on your facility.
What the Bank decided
The Monetary Policy Committee voted 8–1 for the 0.25 percentage point increase. The remaining member preferred a larger rise to 4.25%. The Bank pointed to energy-related inflation pressure and said future decisions would depend on the evidence. Further increases are not a settled schedule.
BritishSME’s earlier report on the March hold at 3.75% provides background. November’s actual increase makes the immediate task more specific: replace assumptions about an unchanged benchmark with the terms that apply to your own borrowing.
Start with the agreement, then the calculation
Make a short list of overdrafts, loans and other finance arrangements. Beside each, record the outstanding balance, whether the rate is fixed or variable, the reference rate, the lender’s margin and the next review or expiry date. Keep the latest statement and agreement together so the information can be checked.
For a simple illustration, a constant £40,000 balance with an interest rate that rises by the full 0.25 percentage points would incur £100 more interest over a year. That is about £8.33 a month on average. This is arithmetic, not a repayment quotation: changing balances, daily interest calculations, fees and the agreement’s timing can produce a different bill.
Ask the lender to confirm the effective date and revised payment or charging basis. A fixed-rate facility may have no immediate rate change, but its expiry still belongs in the forecast. Avoid changing the budget simply by adding 0.25% to the monthly repayment; a percentage-point change applies to an interest rate, not directly to the whole payment.
Put the change beside other cash commitments
Update a weekly cash forecast covering the next three months. Show expected customer receipts separately from invoices already overdue. Put payroll, supplier payments, tax dates, rent and finance charges against the weeks in which cash actually leaves the account.
Then test a second version with a realistic delay in customer payments or a quieter trading week. The point is to identify the lowest cash balance and any pressure on an agreed limit. Use your own trading experience to choose assumptions, and label them so a colleague can understand what changed.
If the forecast shows a shortfall, prepare the figures before speaking to the lender or accountant. Include current balances, the amount and duration of the gap, and the receipts expected to close it. That makes the conversation more useful than a general request prompted by the headline rate.
Give someone ownership of the follow-up
Assign one person to check lender notices and update the forecast. For a small workshop or shop, that may be the owner working with the bookkeeper. Keep a dated note of the assumption used for each facility and a reminder before any fixed term or review date.
The immediate takeaway is a verified borrowing schedule and an updated cash forecast. Those two records show whether this decision changes next month’s cash position, affects a later renewal, or has little direct effect on the business today.
Source: Bank of England: November 2026 Monetary Policy Summary and Minutes, published 5 November 2026.
