CNB Monetary Policy: Corporate Loan Costs, Refinancing Risks and Options

JUDr. Jakub Dohnal, Ph.D., LL.M.
JUDr. Jakub Dohnal, Ph.D., LL.M.
5.5.2026 | ARROWS law firm

The Czech National Bank’s monetary policy directly affects the interest rate at which your company can borrow for investments and operations. Bank loans for entrepreneurs remain more expensive than in previous years – average rates are around 5.65%. Refinancing older loans means an increase in monthly instalments of 20–30%. It is essential to understand how the monetary framework is changing and what legally and economically safe options you have.

In the image, we see an expert consulting on the Czech National Bank’s monetary policy.

Key takeaways

  • The CNB is cutting rates gradually – the two-week repo rate should reach 2.50–3.00% by the end of 2026, but bank spreads are declining more slowly, so CZK-denominated loans remain more expensive.
  • Inflation is falling, but loan prices are not decreasing proportionally – government bond yields and competition for clients keep banks’ margins high, especially for smaller companies and sole traders (OSVČ).
  • Refinancing is the key risk of 2026 – companies with variable-rate loans or expiring fixed-rate periods face a sharp increase in instalments; without legal support and thorough negotiation, you can lose thousands of Czech crowns per year.
  • Alternatives (leasing, factoring, NRB interest-free loans, consolidation) exist, but each has its own rules, benefits, and risks – the right choice depends on the company’s legal form, creditworthiness, and specific situation.

How CNB monetary policy affects the pricing of corporate loans

Transmission mechanism: From the repo rate to your instalment

The Czech National Bank does not set banks’ interest rates directly. Instead, it sets its three key policy rates – the most important of which is the two-week repo rate. This functions as the “base price” of money in the economy. When a bank needs to borrow from the CNB, it borrows at the repo rate. If the repo rate is, for example, 3.75% (which could have been the case in February 2026 as part of gradual easing), the bank borrows at that rate and then provides you with a business loan at 5.9–7%, depending on your creditworthiness.

The difference between what the bank borrows from the CNB and what it offers you is called the bank’s margin. This margin covers the bank’s administrative costs, the risk of your potential default, and the bank’s profit. In theory, when the CNB cuts the repo rate, the rate on your loan should also fall. In practice, this happens with a more or less significant delay and often less markedly than one would expect. Large banks in the Czech Republic keep their margins relatively stable, especially if they have enough clients and competition is not intense.

The transmission of monetary policy into lending is therefore not immediate and not mechanical. A bank considers its liquidity, regulatory requirements, and general market conditions. For example, if a bank holds large volumes of government bonds (as is happening now due to regulatory liquidity requirements – HQLA), more of its money is “working” in low-yield government securities rather than in loans, and it therefore keeps its margin higher.

The state of monetary policy in 2026 and its practical impacts

In the first quarter of 2026, the CNB is in a phase of gradual monetary easing. Inflation is around 1.6% and is expected to remain below 2%. The CNB’s core inflation target is 2%, so the economy is returning to target levels. Based on this forecast, the CNB is gradually cutting its repo rate – in February 2026 it may have reduced it to 3.75%.

Nevertheless, it is crucial to distinguish: inflation is falling, but banks are maintaining higher margins than before. During the period of high inflation (2022–2023), the average rate on CZK-denominated business loans reached 9.12% in October 2022.

Since then it has been gradually declining, but in December 2025 it stood at 5.65% – still historically very high compared to the pre-COVID period. Experts expect a decline to the 5–6% level during 2026, but it is not realistic to assume a return to the historical average of 2.5–3% from the years before 2020.

Why are rates falling more slowly? Banks are behaving conservatively. On the one hand, they face higher capital requirement standards after the 2020–2021 financial crisis, and on the other hand, they follow inflation expectations that remain somewhat elevated, especially in services. Large banks see that the economy is robust, unemployment is low, wages are rising, and therefore they are not rushing to reduce the prices of their products.

How this will play out in practice: Your money will behave differently

If you are asking a bank for a new business loan this year, expect the following:

For sole traders (OSVČ) and small businesses, the average offered rate will be around 5.9–7.0%, depending on your creditworthiness and the type of collateral.

If you have a mid-sized company with solid financial statements, you can expect somewhat lower rates, but not dramatically lower.

Mortgage loans secured by real estate are currently around 3.5–4.5% (with 70% LTV), which is significantly cheaper than business loans, because the property serves as collateral.

If you took out a loan with a variable (floating) rate, each increase in the repo rate should theoretically be reflected immediately in a higher instalment. If you have a loan with a fixed rate, your rate does not change, but when your fixed-rate period ends (typically after 2–3 years), you will need to refinance the loan at the new, current rates.

The biggest risk of 2026: Loan refinancing

When your fixed rate ends – and what it means

A very large number of entrepreneurs and households took out loans in 2020–2022 at the then very low rates (around 2.0–2.8%) with a 2–3-year fixed-rate period. This means that the fixed period ended or will end in 2025–2026. Once the fixed rate expires, you must agree a new rate with the bank. This new rate is based on the current market – and the market is different.

Instead of 2.8%, rates of around 4.7% are now being offered for CZK-denominated loans, which means your monthly instalment will increase by 20–30%. A specific example: if you were paying a mortgage of CZK 10,000 per month, your new instalment will be around CZK 12,000–13,000 per month.

For companies, this can be an existential problem. If you calculated a project’s profitability based on a 3% interest rate and your loan now becomes more expensive at 5–6%, the project may no longer be profitable. Many companies are now deciding whether to:

  1. Accept higher instalments and scale back investments.
  2. Look for another provider (refinance with another bank).
  3. Seek alternative sources of financing (leasing, factoring, EUR financing).
  4. Cancel the project.

Refinancing risks and legal pitfalls

Early repayment fees. Many banking agreements include so-called early repayment fees, which you may have to pay if you want to repay the loan faster or transfer it to another bank. These fees are used to compensate the bank for the loss of interest it would otherwise earn.

It is important to distinguish whether this is a consumer loan or a purely business loan.

For consumer loans (including certain loans for self-employed individuals if they are assessed as consumer loans [under Act No. 257/2016 Coll., on Consumer Credit]), early repayment fees are capped. They must not exceed 1% of the amount repaid early if more than one year remains until the end of the loan, and 0.5% if less than one year remains.

For purely business loans, the statutory caps applicable to consumer loans do not apply, and early repayment fees are typically freely negotiable and higher.

Prohibition on changing the owner without the bank’s consent. If you want to transfer the loan to another bank, you will often find a so-called covenant (contractual restriction) in the agreement stating that you must not change the company’s owner or a substantial shareholding without the bank’s consent. This means that if you have a joint-stock company and decide to sell a substantial stake to a third party, the bank may refuse or make it conditional on additional security.

If your financial situation has worsened since the last assessment, the bank will offer you an even worse rate or refuse you altogether.

The problem with the euro alternative. Many companies take out euro-denominated loans because they are cheaper (on average 2–3 percentage points lower than CZK loans). But this comes with currency risk: if the Czech koruna weakens against the euro, your euro instalments become more expensive when measured in CZK.

Most common questions on loan refinancing and monetary policy

1. Can I defend myself against higher rates if my bank tries to refinance me on worse terms?
Yes, you have several options. First, you can try to negotiate with your current bank—if you are a good client with a history of timely repayments, the bank may want to keep you and offer you a better rate than it offers others. Second, you have the right to transfer the loan to another bank if the original agreement does not contain unreasonable early repayment fees (the attorneys at ARROWS, a Prague-based law firm, can help you review the agreement and negotiate with the bank). Third, if the bank acts unfairly or breaches statutory obligations in the case of a consumer loan, you can file a complaint with the Financial Arbitrator. For purely business loans, you cannot turn to the Financial Arbitrator.

2. If I take out a euro loan, is it a better solution than staying in CZK?
A euro loan is cheaper on paper, but you should never look only at the interest rate. You must take currency risk into account. If the Czech koruna weakens (which happens with certain fluctuations), your euro instalments measured in CZK will increase. If you take out a euro loan, you should also have an adequate portion of your income in euros so that you can hedge against currency depreciation.

3. Is there any legal way to make a loan cheaper without switching to another bank?
One option is consolidation—combining multiple debts (loans, credit cards, non-bank loans) into one new loan with a lower average rate. Another option is to look for support from public sources, e.g., interest-free loans from the National Development Bank (NRB) under the Expanze programme. A third option is to reassess your financing structure—instead of a loan, you can look for an equity financing partner.

How the CNB and the ECB decide—and why it matters to you

Monetary policy in the context of the euro area

The Czech Republic is not part of the euro area (it does not use the euro), but decisions of the European Central Bank (ECB) still affect us. The ECB is expected to gradually lower its key rates, similarly to the Czech National Bank (CNB), with the aim of achieving 2% inflation. This means that the euro area is taking a similarly cautious approach to easing monetary policy as in the Czech Republic.

Inflation in the euro area is around the 2% target, but remains elevated in services, which means that the ECB and the CNB agree on gradual and more cautious rate cuts.

What is the practical impact? If you work or do business with German, Austrian, or other European partners, their financing conditions remain relatively tight. If you take out a euro loan from a European bank, we do not recommend expecting a dramatic drop in interest rates over the next 12 months.

CNB domestic forecast for 2026 and beyond

The CNB currently (February 2026) expects:

Inflation: Around 1.6% in the first quarter of 2026, followed by an increase to 2.1% in 2027.

Economic growth: Around 3% in both 2026 and 2027.

Repo rate: Gradual reduction towards a range of 2.50–3.00% by the end of 2026.

Exchange rate: The Czech koruna is expected to be approximately stable against the euro.

This means that the economy is doing relatively well, unemployment is low, and wages are rising. Inflation is returning to target, but the decline is not dramatic. The CNB will therefore continue to cut rates gradually, but without panic and without an initial sharp drop.

In practical terms: If you are waiting to take out a loan, it is better to decide now or as soon as possible, because rates will decline only gradually. There is no point waiting for “better times”—they will come gradually and not as dramatically as some might wish.

Alternatives to a traditional business loan

Leasing and financial operations

If you want to finance a specific asset (machinery, vehicles, software), leasing is usually an effective alternative to a business loan. With operating leasing, you rent the asset from the leasing company, return it at the end of the contract, and the instalments are treated as an expense item. With finance leasing, the asset typically becomes your property at the end of the contract and is depreciated as part of your assets.

The advantages of leasing include lower monthly instalments, the possibility of keeping the asset off the balance sheet in operating leasing, and easier upgrades of obsolete assets.

Disadvantages: At the end of operating leasing you do not own the asset, leasing is more expensive than a cash purchase, and in the long term the instalments are often higher than the interest component of a standard loan.

The attorneys at ARROWS, a Prague-based law firm, can help you review the terms of the leasing agreement and ensure there are no hidden fees buried in it.

Factoring – sale of receivables

If you have receivables from customers (unpaid invoices), you can sell them to a factoring company, which will pay you approximately 70–90% of the invoice value immediately. Factoring is a typical solution for companies that are waiting for payments from their customers and need cash for day-to-day operations.

The advantages of factoring include immediate liquidity, collection handled by the factoring company, and the transfer of the risk of non-payment of the invoice to it (in the case of non-recourse factoring).

Disadvantages: You lose 10–30% of the invoice value, your customers may be aware that their invoices are in someone else’s hands (which may harm the relationship), and factoring is not suitable for long-term financing.

Interest-free loans from the NRB (National Development Bank)

As of 2 February 2026, the National Development Bank is accepting applications for interest-free loans under the Expanze OPTAK programme. This is state support intended for sole traders and small and medium-sized enterprises. The parameters are attractive:

The loan is provided in the range from CZK 1 million to CZK 100 million.

Maturity of up to 15 years, with the option to defer repayments for up to 3 years.

The loans are interest-free and fee-free.

Financing of up to 50 percent of the project’s investment expenditure.

Co-financing from a commercial bank or a leasing company is required in a minimum amount of 20 percent of the project’s investment expenditure.

Specifically: If you want to buy machinery for CZK 100 million, the NDB will lend you CZK 50 million interest-free, you will take CZK 20 million from a commercial bank with interest, and you must have the remaining CZK 30 million from your own resources or look for another financier.

This is a unique opportunity to finance half of a project interest-free.

Disadvantages: Administratively demanding, requires a high-quality business plan, the project must not be in Prague (this limitation typically applies to regional support), and the approval period is 2–4 months.

If you meet the conditions, you should definitely consider this programme, because the interest savings can be enormous.

Debt consolidation

If you have multiple debts (business loans, credit cards, non-bank loans), you can consolidate them into one new loan. Banks often offer you a lower average rate in return, because the administrative burden and risk are reduced.

Clients who consolidate at least three products achieve an average reduction in the interest rate of 5.5 percent, which can mean significant savings on monthly instalments. For a debt of CZK 400,000, this means reducing the monthly instalment from CZK 9,200 to CZK 6,400 – a saving of CZK 2,800 per month.

Advantages: One instalment instead of several, a lower average rate, easier money management.

Disadvantages include the potential extension of the repayment period, although many banks have already abolished or reduced processing fees.

Most common questions about financial products and choosing them

1. When is it appropriate to choose a fixed interest rate and when a variable one?
A fixed rate is suitable when you want certainty and stable repayments regardless of market developments. It is ideal to choose it in a period when rates are relatively low or are expected to rise. Today (2026) I would recommend a fixed rate, because although rates are falling, they are doing so gradually, and you have certainty. A variable rate is suitable when you expect rates to fall (which is happening now) and you are confident you can handle an increase in repayments even if the repo rate rises. A variable rate carries risk, but in a period of gradual rate cuts it can bring you savings.

2. How do I find out whether the rate offered by the bank is fair?
Comparison with other banks is key. Look at the average rates other banks are offering in March 2026 – you should find them on specialised portals or in financial media overviews. If the bank’s offer is significantly higher (by more than 1–2 percent), ask why. It may be due to your creditworthiness (lower income, more debt), the type of loan (overdraft vs. a standard loan), or simply because the bank is more expensive. Our attorneys in Prague at ARROWS can help you review the offered terms and negotiate a better rate with the bank.

3. What information must I receive by law from the bank before signing the agreement?
The bank must provide you with clear and well-structured information about:

  • The amount of interest and the fee structure (everything should be included in the APR indicator – annual percentage rate of charge, if the loan falls under the consumer credit regime).
  • The term for which you are taking the loan.
  • The amount of the monthly instalment and the total amount payable.
  • Conditions for early repayment and any associated costs.
  • Covenants (contractual restrictions, e.g., that you must not buy another property without the bank’s consent).
  • Security (what assets the bank will take as collateral).

As part of the transposition of the new European consumer credit directive, which is to be implemented into national legislation by November 2025 (with expected effectiveness in the Czech Republic in 2026), further strengthening of consumer protection is expected, including transparency and assessment of repayment ability. If the bank fails to meet its information obligations or conceals important terms from you, you can file a complaint.

Legislative changes in 2026: What you need to know

New Consumer Credit Act (expected to take effect in 2026)

The Czech Republic is implementing a new European directive on consumer credit (the so-called CCD2, Directive (EU) 2023/2225), which is to be transposed by November 2025, and the national legislation is expected to take effect during 2026. Key developments these changes will bring include:

The legislation will seek to prevent predatory lending by tightening rules on the maximum permitted level of interest rates and the total cost of credit. The exact methodology for setting the cap will depend on the specific transposition, but the aim is to prevent the offering of utterly unreasonable rates.

Assessment of repayment ability: The bank must now explicitly demonstrate that you are able to repay the loan. This assessment will be even more thorough. If a bank grants a loan to someone who clearly cannot afford it and you cannot repay it, you will not be bound by the terms of the agreement – you will repay only the principal, without interest and fees.

Even interest-free loans and “buy now, pay later” options will be subject to the law and will have to be provided by registered entities under supervision by the Czech National Bank (ČNB).

Ban on misleading advertising: Advertising must not imply that you should take out a loan when you do not have the means, or that a loan will improve your life without any doubt. Advertising rules will be stricter and will emphasise responsible lending.

Table of practical risks and how ARROWS helps you

Potential issues

How ARROWS can help (office@arws.cz)

Refinancing at a worse rate : Your fixed rate expires and the bank offers significantly worse terms; you know it should be lower, but you do not know the legal route.

We will review your existing agreement , identify your rights, negotiate a better rate with the bank, or arrange a transfer of the loan to another bank at the lowest possible cost; we will ensure that any early repayment costs are fair and minimal.

Uncertainty when choosing the type of loan : You do not know whether to take a fixed or variable rate, whether leasing or consolidation is better, or whether you meet the conditions for an NRB programme.

We will carry out a comparative analysis of all available options in the context of your specific situation ; we will set up financial modelling for different scenarios; we assist with the NRB application and preparation of documentation.

Early repayment costs and hidden fees : The agreement contains “early repayment costs” or other hidden fees that later bother you or come as a surprise.

Contract review before signing ; identification of unreasonable costs and fees; negotiations with the bank to reduce or cancel them; legal analysis of whether the contractual terms comply with Czech law.

Currency risk with a euro-denominated loan : You took out a euro-denominated loan, but the Czech koruna exchange rate is worsening and your instalments are rising quickly.

Analysis of your currency exposure and natural hedging (if you have income in euros); negotiations with the bank regarding the possibility of partial conversion into Czech koruna; long-term legal advice on selecting the appropriate type of financing.

Issues negotiating the budget and collateral : The bank requires high collateral or additional conditions that make it harder for you to access a loan.

Legal advice on regulatory and internal bank limits on collateral and indebtedness , which primarily apply to consumer loans, but banks also take them into account when assessing the creditworthiness of business entities, especially smaller companies and sole traders (OSVČ); negotiations with the bank on flexibility; searching for alternative sources of financing; assistance with preparing and improving a business plan for the bank.

Final summary

2026 is a year of transition. The Czech National Bank (ČNB) is slowly cutting rates, inflation is falling, but corporate loans remain expensive—on average around 5.65% and higher. The biggest risk for entrepreneurs is refinancing: companies that took out loans in 2020–2022 at 2.0–2.8% are now facing jumps to 4.7% and higher, which means an increase in instalments of 20–30%.

However, you have options, such as negotiating with the bank, transferring the loan to another bank, an interest-free loan from NRB, debt consolidation, or using leasing and factoring. The key is not to decide hastily and to have a precise legal and financial assessment of the situation.

Our attorneys in Prague at ARROWS can help you with contract reviews, negotiations with banks, analysis of alternatives, and preparation of documentation for new loans. If you do not want to risk mistakes that will cost you thousands of Czech koruna, or to defend yourself against unreasonable rates and costs, contact us at office@arws.cz.

Frequently asked questions on business financing in 2026

1. In what situation should an entrepreneur take a euro-denominated loan instead of a Czech koruna loan?
A euro-denominated loan has a lower rate (typically by 2–3 percentage points), but it carries currency risk. Take a euro-denominated loan if you also have a reasonable portion of your income in euros (e.g., you export abroad and receive payments in euros) or if you are borrowing for a project that will generate revenues in euros. If all your income is in Czech koruna, a euro-denominated loan is a risky bet. We can advise you at office@arws.cz.

2. What should I do if the bank is trying to push me into refinancing at a significantly worse rate?
You have the right to say “no” and ask for an explanation of why the rate has worsened. If it is only because the bank wants a higher profit, you have the right to transfer the loan to another bank (provided that the original agreement does not include unreasonable early repayment costs). Legal advice can help—contact ARROWS at office@arws.cz.

3. Is it better for me to take leasing for vehicles or a standard loan?
Leasing is usually efficient from a cash-flow perspective over the period when you need the vehicle and allows more frequent replacement of assets. However, if you want to own the vehicle long-term, a loan is often the better choice. Leasing makes sense for companies that want new vehicles every 3–5 years and do not want to deal with selling the old vehicle. Every situation is different—we can advise you at office@arws.cz.

4. Do I meet the conditions for the NRB Expanze programme?
The Expanze OPTAK programme is intended for sole traders and small and medium-sized enterprises, typically outside Prague. Support is provided for investments in machinery, technologies, software, buildings, or modernisation of operations. Minimum and maximum project amounts: CZK 1–100 million. The main condition: the project must meet the programme’s specific criteria and you must have at least 20% co-financing from another provider. If you are interested, we can help you with the application—office@arws.cz.

5. Can I have my loan agreement reviewed before I take out a new loan or refinance?
Of course! It is the best step you can take. ARROWS attorneys will review the agreement in terms of your rights, identify hidden costs and fees, and advise you on how best to negotiate with the bank. Contact us at office@arws.cz.

6. What are my options if I have repayment problems or have fallen into a debt trap?
You have several legal options: renegotiation of the agreement with the creditor, debt consolidation, or an assessment of whether the creditor acted lawfully. If it is a consumer loan, you can contact the Financial Arbiter (Finanční arbitr). For business entities, processes such as reorganisation or insolvency proceedings are also available. ARROWS attorneys will help you choose the right course of action. Write to office@arws.cz.

Notice: The information contained in this article is of a general informational nature only and is intended for basic orientation in the matter based on the legal status as of 2026. Although we take the utmost care to ensure accuracy, legal regulations and their interpretation evolve over time. We are ARROWS advokátní kancelář, an entity registered with the Czech Bar Association (our supervisory authority), and for maximum client protection we are insured for professional liability with a limit of CZK 400,000,000. To verify the current wording of regulations and their application to your specific situation, it is necessary to contact ARROWS advokátní kancelář directly (office@arws.cz). We accept no liability for any damages arising from the independent use of information from this article without prior individual legal consultation.

Read also: