The Bank of England has cut interest rates by a further 1% to 2% — its lowest since 1951.
The historic move is designed to spark growth in the economy and will benefit homeowners and borrowers but will only have an effect if the banks pass on the rate cut.
The cut follows a 1.5% cut just last month.
"This historic rate cut sends out the right message to the banks to lend fairly to small businesses," said Federation of Small Businesses national chairman John Wright.
"One in three of our members are still reporting trouble accessing finance so this move is very welcome. The burden is now on the banks to pass this cut on to their customers. This cut will provide a welcome piece of mistletoe to give a kiss of life to the economy when it needs it most."
The upshot could be customers with more money in their pockets and licensees with more money to invest in their business.
Jeremy Hill, director at Christie + Co, said: "This latest cut will hopefully act as a further stimulus to generate growth in the economy and compel banks to increase their lending to businesses in the hospitality sector. It is vital that they now pass this latest cut on to companies to help them weather the current downturn."
One banking source added: "The move was widely anticipated, particularly in light of recent inflation data, which showed a decline of 0.7% from the previous month's high of 5.2%, and is aimed at stimulating the beleaguered UK housing market and helping those struggling with mortgage repayments and facing potential repossessions.
"Pressure now lies with the banks to pass the cut on — not only on existing variable rate and tracker mortgages but also on to new mortgage deals."