The Borrowing Landscape: It's Not 2019 Anymore

If you're thinking about a bank loan, you need to understand how dramatically the lending landscape has changed.

In 2020, the Bank of England base rate sat at a historic low of 0.1%. Money was cheap. Banks, bolstered by government-backed pandemic lending schemes, were handing out loans relatively freely. SME bank lending surged to almost £105 billion — an 84% jump over pre-pandemic levels.

That world is gone.

The base rate hit 5.25% in August 2023 — the highest since 2008. The effective interest rate on new loans to SMEs has sat above 7% for much of 2023 to 2025. As of mid-2025, it was still around 6.5%. Business loan rates now typically range from 4% to 15%, depending on the lender and your risk profile.

But the rates are only half the story. Getting approved at all has become dramatically harder. Between 2018 and 2023, the success rate for SME loan applications fell from 80% to just 50%. Banks have become far more risk-averse, and a brewery — with its thin margins, perishable product, and saturated market — is not exactly what a risk-averse lender wants to back.

This has created what the British Business Bank calls a £22 billion funding gap: the difference between what UK SMEs need and what banks are willing to provide.