The increased cost of borrowing caused by recent interest rate rises aimed at bringing down inflation has resulted in many of the UK’s SMEs passing these costs onto their customers, according to the latest independent research from Close Brothers Asset Finance and Leasing.

Three in five firms who responded to our survey confirmed that they had already raised their prices, with 37% saying they had not. The results were consistent across the sectors, albeit in manufacturing the figure rose to 66%.

A further 45% of business owners felt interest rates were yet to peak, against 39% who felt that they had. In transport and haulage, this figure increased to 55%.   

For 36% of respondents, the increased interest rate rises have prompted them to switch funder as they look for more attractive deals, and another 52% have considered alternative forms of funding, including asset finance.

Matt Roper, CEO of Close Brothers’ Commercial business, said: “Nearly every business that has debt funding will have been impacted by the recent interest rate rises, which has led to an increase in borrowing costs.

“These have been passed onto businesses who, in turn, have had to raise prices for their own customers.

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“Despite this, the appetite to finance growth is strong with 73% of business owners saying they plan to seek funding for investment in the coming 12 months.

“And what our research shows is that firms are open to exploring alternative forms of funding that can bring benefits they hadn’t considered before, for example, using their existing assets to release funds for investment in new equipment to help grow their business.”

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