How Rising Interest Rates May Impact Your Business
What can your businesses do to safeguard and grow in the current economic environment? Here are 3 quick tips to help you navigate these uncertain times.
1.Assess the State of Your Business
One of the best ways to navigate an uncertain economy is to have strong business fundamentals. Going into the end of the year, it’s advisable to assess the state of your business, along with what you can do better. Compare your budgets and projections at the end of the year to where you started the year and assess what’s working and what’s not. Are there areas of growth you're not pursuing? Unnecessary expenses? When it comes to adapting a business to the current situation, a great place for you to start is where you are currently.
2.Look at Outstanding Debts
If you have outstanding debts, the impact of rising rates will likely depend on the type of loan you have, and whether your loan terms are variable rate or fixed rate. Variable rate loans will typically see an increase in monthly payments as Fed rates rise, whereas, if you have a fixed rate loan, your payments will likely not change. In terms of type, you may have a loan with high rates and unfavorable repayment terms. In that case, consider refinancing your debt with an SBA 7(a) loan — a product with lower rates, long terms, and a more manageable monthly payment.
3.Plan for the Future
Right now, it’s important to add some wiggle room in your budgets to account for prolonged inflation and rising rates. Explore cost-cutting measures, contingency plans, and other ways to make your monthly expenses more predictable. In terms of financing, a fixed-rate term loan would typically be a good fit for a business owner who does not want any surprises — however minor — and values the ability to budget their expenses precisely each month.
Everyone is trying to understand how rising rates are going to continue to impact their lives, businesses, and bottom lines. If you need more information or would like to discuss this topic further, please feel free to contact your Fluid representative or email info@fluidbusinessresources.com.