The Bank of England has raised interest rates from 0.25 per cent to 0.5 per cent, the first increase since July 2007.
And the Governor of the Bank of England, Mark Carney, has warned there may be more rises to come in the near future.
Responding to the announcement, Mike Cherry, Federation of Small Businesses (FSB) National Chairman, said: “Today’s rate rise will mean yet more cost pressures for small firms as they battle spiralling prices and flagging consumer demand. An increase was inevitable at some stage so many businesses will have expected today’s rise.
"But that’s not to say they can absorb more hikes in the short-term. This change must be allowed to properly bed in before further increases are considered.
“Only one in ten small firms is currently applying for external finance and we have a chronic issue with permanent non-borrowers in the small business community.
"Today’s rate increase could heighten the sense that borrowing is too expensive if you’re a small firm. That would threaten investment, growth and job creation.
“You also need to consider the fact that, for a typical micro business owner, personal and business finance are closely interlinked. If mortgage and car leasing payments start to rise that’s less money to play with when it comes to expanding the business and taking on new people.”