2 min read
Definition
A basis point (bp or "bip") equals 0.01%. One hundred basis points make one percentage point. It is how rate moves and lending margins are quoted precisely.
In plain terms
If the Bank of England raises the base rate by 25 basis points, that is a 0.25% rise. Saying "basis points" removes the ambiguity of "a quarter point".
Why it matters for your company
Loan margins are set in basis points over base rate (e.g. "base + 450 bps"). On a large facility, 50 bps is real money — worth negotiating.
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