Today’s 1% cut in base rate to 2% will probably have negligible effect on SME factoring and invoice discounting clients as firstly many of the providers have already moved over to LIBOR as a charging rate and secondly many of those who have remained on base rate will have minimum base rates included in their agreements and these could well be 4% or 5% so any factoring client on 3% over base could still be paying 8% pa
Time to dust off those factoring agreements and check the wording
The recent drop in interest rates does not make sense and simply panders to the media. It demonstrates a politician doing something with little or no knowledge of economic implications. Economically it will not help the UK come out of recession, there are as many people penalised by a drop as helped. To businesses unable to cope with borrowing at a sensible margin over base rate at, say, 5%, then they probably shouldn’t be in business in the first place.