As with every industry, there is so much uncertainty surrounding business loans and whether or not they will be impacted when Britain eventually leaves the EU. We’re going to explain the likely impact of Brexit on business loans, what it means for the future and whether or not Brexit is a sure thing.
Britain leaving the EU will no doubt have an impact on business loans. The Bank of England has on multiple occasions warned that lending to businesses could well dry up in a post-Brexit UK. This is due to the fact that companies from EU member states like Iceland, Liechtenstein and Norway account for around 10% of the loans given to UK businesses.
Those very same countries, along with every other EU member, currently require a passport to operate in the UK and if Brexit is going to happen in the hard fashion so many believe, then it’s likely that their passports will be relinquished.
What This Means For The Future
Each company from the EU, which want to operate in the UK, will then have to reapply for a passport to work in the UK, which according to the Financial Conduct Authority would amount to over 8000 reapplications, placing a huge burden upon the regulators.
This means if suitable measures are not taken, then many of the EU member states that contribute to the business loan industry, could be lost in the pile and not be able to work in the UK.
These revelations led to the Bank of England’s financial policy committee, which was founded after the financial crisis of 2008, to state that there were ‘significant risks’ to trades, like business loans, being disrupted after Brexit.
This is without considering the likely economic impact leaving the EU might have and already is having on the UK.
At the beginning of this year The Financial Times predicted that by March, the economy would be 1.2% smaller than what it would have been before or without a Brexit vote.
That accumulates to a £24bn loss for the British economy, amounting to what they called a ‘Brexit Cost’ of £450m a week, which results in each household in the UK losing around £870 per year and that prospective figure is going to continue to rise.
What’s more, with the continuous decrease of the English pound, business loans won’t be worth as much on an international market as they once were before. At the beginning of this year, sterling grew by just 0.1% in its first quarter, its worst value for almost half a year.
To put the pound’s value into perspective, since the referendum, sterling has fallen by 12% when compared to the Euro and 5% against the dollar. This illustrates the impact Brexit is having, it is decreasing the value of British business loans internationally.
Although as we edge closer to March 2019, it’s looking more and more inevitable, Brexit still isn’t a sure thing and there are a series of actions the UK government can take to avoid leaving the EU altogether.
The first is to call another referendum, a measure that more than half a million protesters supported in the People’s Vote march in October.
This would likely cause outrage amongst leave voters and supporters, but at least 670,000 people would be in support of the action after they gathered in London as part of the biggest public demonstration since the protests against the Iraq War in 2003.
With a number of political figures including the Mayor of London, Sadiq Khan and Labour leader, Jeremy Corbyn in support of the proposition, this could be argued as the most viable option to prevent or at least change the fashion in which Britain will leave the EU.
This, alongside the multiple MP votes which will take place on the type of deal the UK government will get, are likely to be the only ways in which Brexit will either be halted or stopped altogether.
It’s undeniable that Brexit will have an impact on business loans, whether it be through the relinquishing of EU members passports or the sheer devastation that will be caused through Britain leaving the EU to the economy, which will inevitably reduce business loans’ international value.
However, there will be measures to minimise its impact, of which Think Business Loans will be at the forefront of.
We’ll provide you with the best loan providers following Brexit, by comparing over 2000 lenders to find you the least affected business loan companies, as well as the most affordable and suitable ones for you.
Using our iFund matching technology, your business will be vetted against 18,000 different data points to establish the right lender for you, taking into account your business’s annual turnover, the years it has been trading for and the amount of money that you are requesting as a loan.
Our expert lending managers will then be on hand to answer any questions you might have regarding your business loans, as well as discuss any further options and the next step forward.
Then once you’ve completed your phone consultations with our lending managers, you’ll be able to receive your loan and grow your business in a post-Brexit era.
For more information regarding business loans, be sure to contact one of our expert team who will be happy to answer any questions or queries you might have. Alternatively, you can speak to one of our experts by calling 0203 880 9980.