The Bank of England publishes what banks charge companies on new loans every month, and separately what they charge small and medium-sized companies.1 In September 2026 a new loan to a British company cost 5.47%, 172 basis points over Bank Rate of 3.75%. A new loan to an SME cost 6.55%, 280 basis points over.
The gap between them, 108 basis points, is the price of being small. It has not narrowed. The margin small companies pay over Bank Rate is exactly where it was on average from 2016 to 2019. The margin paid by all companies is narrower than it was then, 172 basis points against 208.
Over the last twelve months the two moved in opposite directions. Bank Rate fell by a quarter of a point. The rate on new loans to all companies fell by 7 basis points. The rate on new loans to SMEs rose by 37.
The euro area shows the same pattern at a lower level. A new bank loan of €250,000 or less cost 4.43% in September, 205 basis points over the ECB's deposit rate of 2.5%. A loan of over €1m cost 3.64%, 127 basis points over.2
The small company pays for being small, and the bill has not come down.
For a British or European owner, two things follow. First, a cut in Bank Rate does not reach a small company's loan by itself; the margin is negotiated separately. Second, the size premium is a reason to borrow once, at a scale that a bank or a debt fund prices as a larger company, rather than in several small loans. Every series, monthly since 2015, is in the Ledger.
Method. Effective interest rates on new sterling loans to UK private non-financial corporations and to SMEs, Bank of England, monthly; euro-area composite cost of borrowing for non-financial corporations by loan size, ECB, monthly. Margins are over Bank Rate and the ECB deposit facility rate at the same month. The Bank of England's series by loan size ended in 2015, so the SME series is used from 2016.
“The small company pays for being small, and the bill has not come down.”
Sources
- Bankstats and effective interest rates on new loans to private non-financial corporations, Bank of England, to September 2026
- MFI interest rate statistics, composite cost of borrowing for non-financial corporations, European Central Bank, to September 2026
Cite as: “A UK small business pays 280 basis points over Bank Rate”, Norvian Review, 7 November 2026.
