How the bold Rate Cut to 18% empowers small businesses and entrepreneurs

As an SME Industry Coach with over 18 years of experience working with small business owners and aspiring entrepreneurs in Ghana and elsewhere, I’ve seen firsthand how macroeconomic policy shifts, particularly changes in interest rates, can have a significant impact on the day-to-day realities of starting, running, and growing a business.

On November 26, 2025, the Bank of Ghana (BOG) announced a 350-basis point (bps) cut in its benchmark monetary policy rate, reducing the rate to 18.0 percent. This is a significant breakthrough, especially for small businesses and entrepreneurs who have long suffered with excessive borrowing costs. This article explains why this cut is important and how you, as a small business owner, may convert it into an opportunity.

Improved Access to Affordable Credit

Perhaps the greatest immediate advantage of a lower policy rate is that borrowing becomes more affordable. As interest rates decline, commercial banks’ loans, lines of credit, and overdrafts tend to have lower interest costs, making borrowing more affordable.

Lower interest payments can significantly relieve financial pressure for many small firms, particularly micro- and small enterprises that rely on working capital, inventory finance, or short-term loans. Instead, then paying a large amount of their revenue on high-interest loans, companies can allocate funds to operations, inventories, or overhead.

Increased Cash Flow and Financial Flexibility

Lower borrowing costs and monthly loan commitments increase cash flow. This is especially crucial for small enterprises, which frequently operate with thin margins, cyclical income, or inconsistent cash inflows.

Businesses with stronger cash flow can better handle day-to-day expenses, such as paying suppliers, payroll, rent, and utilities, without the constant burden of loan repayment requirements.

This adaptability can help entrepreneurs deal with seasonal swings in sales, inventory cycles, and unforeseen operating costs. Furthermore, improved cash flow strengthens a company’s resilience, making it simpler to endure shocks (such as client payment delays, supply problems, or economic headwinds).

Opportunity to Restructure Existing Debt

This policy adjustment allows small firms with high-interest loans to refinance or restructure debt for better terms. Refinancing at a lower interest rate might considerably reduce monthly payments, total interest throughout the loan’s lifetime, and overall debt servicing capability.

This is a strategic step that many entrepreneurs overlook, but with today’s rate cut, it could be a good moment to reassess existing loan agreements with banks. Entrepreneurs will have the opportunity to alleviate financial stress, reduce default risks, and improve the long-term viability of their business operations.

Improved Ability to Invest in Growth

As borrowing becomes more accessible and cash flow improves, small businesses will have more resources to invest in expansion, whether that means expanding operations, purchasing new equipment, increasing inventory, or launching new product lines. Lower-cost financing may make capital-intensive ventures more feasible.

This is an excellent chance for entrepreneurs who want to expand their businesses by opening new locations, expanding their product offerings, and enhancing operations. Growth-oriented ventures that were previously prohibitively expensive may now produce worthwhile returns. In a larger sense, an increase in corporate expansion fueled by cheaper credit can stimulate the economy by increasing trade, jobs, and demand for goods and services.

Enhanced Business Confidence and Entrepreneurial Activity

Lower interest rates tend to promote economic demand by encouraging people to borrow, spend, and consume more. For small business owners and entrepreneurs, the increase in consumer demand, along with lower borrowing costs, can boost business confidence.

When business owners anticipate increased demand and readily available finance, they are more likely to take measured risks, such as establishing new enterprises, expanding operations, recruiting, or investing in marketing. This resurgence in entrepreneurial activity can be especially advantageous in a market like Ghana, where many micro- and small companies are the foundation of trade and livelihood.

Manage Working Capital

Small businesses are frequently the most vulnerable during times of economic stress, since high borrowing prices, limited margins, or tardy consumer payments can swiftly force them into financial difficulty.

Lower interest rates alleviate one big risk: the cost of debt. Businesses with lower loans and greater liquidity have more breathing room to manage working capital, pay suppliers on schedule, replace inventory, meet payroll, and absorb temporary shocks. This is especially important in industries with variable cash flow timing, such as retail, agriculture, manufacturing, or services.

Conclusion

The Bank of Ghana’s decrease of the policy rate to 18% on November 26, 2025, represents a watershed moment for Ghana’s small business sector. For entrepreneurs and small business owners, it means more cheap loans, better cash flow, easier access to working capital, and new opportunities for growth and resilience.

In my 18 years as a business consultant, I’ve seen enterprises languish not due to a lack of ideas or passion, but because finance was unreasonably expensive.

Dr Ayiku is a Senior Lecturer/SME Industry CoachCoordinator (MBA Impact Entrepreneurship and Innovation) University of Professional Studies Accra

ayiku.andrews@upsamail.edu.gh

IG: andy_ayiku

@AndrewsAyiku

F: Andyayiku