At the start of 2026, the consensus was clear: interest rates were expected to fall, easing pressure on businesses and unlocking cheaper access to capital. That expectation fed directly into how transactions were being structured, with borrowers comfortable committing to funding on the basis that future costs would reduce rather than increase. Following the Bank of England decision on 26th March to hold rates, combined with growing geopolitical uncertainty, lenders have started to change how they communicate internally and externally, and that shift is now coming through in live deal flow.
Over the weekend, we received lender emails that began referencing uncertainty and signalling that while pricing is being held for now, expectations are moving towards increases later in the year, despite earlier indications in January that rates would remain stable or fall. This aligns with what we set out earlier in our own outlook on SME borrowing costs, where lender behaviour was already pointing towards a divergence between public expectation and internal positioning.
How This Shows Up in Real Transactions
A business agrees to acquire equipment or secure working capital and approaches funding based on terms discussed earlier in the quarter. The lender has already reviewed the deal, understands the risk profile, and is comfortable proceeding, but the response now includes qualifying language around pricing rather than a straightforward confirmation. Credit teams are still approving deals, but they are doing so with a closer eye on margin and with internal discussions about how long current pricing can realistically be maintained.
In practical terms, nothing about the transaction has changed from the borrower’s perspective. Revenue assumptions, asset values, and cashflow forecasts remain the same, but the lender’s cost of capital is being reassessed in real time. This creates a situation where two identical transactions, completed a few weeks apart, can be priced differently without any structural change. The earlier deal benefits from the lender’s previous assumptions, while the later deal reflects a revised outlook.
Essentially, acting sooner rather than later is expected to be the cheaper choice.
Where the Friction Appears
The friction is not in access to funding, as liquidity remains available and lenders are still actively looking to deploy capital, but in how quickly pricing decisions are being revisited. Lenders are not immediately updating published rate cards because doing so risks slowing pipeline and losing deal flow, so the adjustment begins more subtly through credit conversations and internal guidance.
Borrowers encounter this when indicative terms are issued with shorter validity periods, when credit approvals include caveats around market conditions, or when lenders encourage progression of deals within a defined timeframe. None of these are formal rate increases, but they are early indicators that pricing is being held temporarily rather than set with long-term certainty.
This is consistent with how repricing cycles typically unfold. Lenders first reassess their position internally, then communicate cautiously to intermediaries, maintain existing pricing while pipeline is strong, and finally adjust rate cards once the market direction is clearer. The current stage sits between internal reassessment and formal repricing.
Timing Has Become Part of the Credit Decision
The practical response is to treat timing as a core part of the funding decision rather than a secondary consideration. A business planning to raise capital in the next three to six months should be approaching lenders now, even if the drawdown is not immediate, because the objective is to secure terms based on current pricing rather than waiting for conditions to stabilise.
Under normal conditions, lender approvals and pricing are typically held for around 30 days, which allows enough time to progress documentation and complete without exposure to repricing. In a shifting market, that window shortens. Lenders begin reducing validity periods to seven days or less as they reassess their cost of capital more frequently, and in more volatile periods, such as during COVID, approvals were sometimes only held for 48 hours. The current environment is not at that level, but the direction of travel is the same, with lenders signalling that pricing is being held temporarily rather than committed for any meaningful duration.
This changes how transactions need to be managed. Delays that would normally be inconsequential can now result in revised terms, even where the underlying deal remains unchanged. Earlier engagement and faster execution become commercially relevant, not just operational preferences.
Integrating the Response Into the Funding Process
A typical funding process begins with identifying the requirement, followed by structuring the facility around the business’s operating cycle, then securing pricing based on current market conditions. In a stable environment, these steps are relatively independent, but in a shifting environment, pricing becomes the most time-sensitive element.
Once indicative terms are obtained, the focus shifts to progressing the deal through credit and documentation quickly enough that those terms remain valid. Delays at this stage introduce the risk of repricing, particularly where third parties are involved and timelines extend beyond the borrower’s control.
Lenders are currently balancing the need to maintain deal flow with the need to protect margin, which means they are more likely to support transactions that progress efficiently and less inclined to hold pricing open indefinitely. Borrowers who can provide information quickly and move through the process without delay are more likely to secure favourable terms.
Why This Matters Commercially
The commercial impact of rate increases is rarely isolated to a single facility. Most businesses operate with multiple funding lines, and a small increase in each can compound into a noticeable shift in overall cost of capital. This affects not only current transactions but also the viability of future opportunities, as higher funding costs reduce available margin.
In sectors with longer cash conversion cycles that use variable rate funding lines like traditional invoice factoring, such as manufacturing or distribution, the effect is more pronounced because funding is required for extended periods before revenue is realised with rates tied to the base rate or LIBOR. An increase in cost across that cycle reduces the surplus generated from each transaction, which in turn limits reinvestment capacity.
Access to funding also becomes more valuable as conditions tighten. Businesses with established facilities can continue operating and taking on new work, while those relying on future funding may find that terms are less favourable or more restrictive, especially when it comes to fixed-rate funing. This creates a divergence between businesses that have secured funding early and those that have not.
A Clean Example
A company importing finished goods uses trade finance to pay suppliers on shipment, with repayment expected within 120 days. Once the goods are delivered and invoiced, an invoice finance facility advances a percentage of the invoice value, repaying the trade facility and releasing surplus cash. At the start of the year, the structure is priced on the assumption of stable or falling rates, with invoice finance margins sitting over base rate and trade finance priced on a fixed monthly cost.
If the same structure is implemented later in the year after lenders have adjusted pricing, the trade finance cost increases and any new invoice finance facility may be written with a higher margin over base. Existing invoice finance lines will typically track base rate, but new facilities are typically underwritten with heightened protection buffers, meaning a higher cost above base. The mechanics remain identical, but the blended cost of capital increases, reducing the retained profit per cycle.
This effect is more pronounced in fixed-rate facilities such as asset finance, unsecured loans, and term lending. Once those are written, the rate is locked for the duration, so a deal completed earlier benefits from lower pricing throughout its life, whereas the same deal completed later carries a permanently higher cost.
If the fixed-rate elements are secured earlier, the pricing reflects the previous assumptions, and the business retains a higher margin across the term of the agreement. The operational process does not change, but the financial outcome does.
Practical Relevance for Businesses
The current environment requires a more deliberate approach to timing. Businesses should review funding requirements for the near term and progress viable transactions while current pricing remains available. Indicative terms should be secured early, and deals should be advanced efficiently to reduce the risk of repricing.
There is no need to wait for formal confirmation of rate increases, as the shift is already visible in lender behaviour and was signposted earlier in the year through how lenders were positioning themselves behind the scenes. Acting within this transitional period allows businesses to secure terms that may not be available once the market fully adjusts.
Finspire Finance works with a panel of lenders across asset finance, working capital, and structured facilities. If there is a transaction under consideration, reviewing it now ensures it is aligned with current conditions and progressed within the window where pricing is still being held before repricing becomes formal.
Speak to Finspire Finance
If you’re considering funding in the next 3–6 months, now is the time to get visibility on terms and move early where it makes sense. Waiting for clarity on rates usually means accepting higher pricing.
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