If you are a small business owner, you must have heard on the news that the Federal Reserve is increasing interest rates. Interest Rates On Business Loans.
These interest rate increases might not be felt now but can be physically felt in the future. With the federal government continuing to raise interest rates, how will these increases in interest rates affect small businesses taking out a loan?
When the Federal Reserve increases interest rates, the rates for mortgages, auto loans, and small business loans will be affected by the increased interest rate hikes. With the country’s economic situation, these interest rates can affect your business.
Effective Federal Funds Rate
During the Great Recession of 2008, the Federal Reserve kept interest rates at zero. The zero interest rate was designed to help to stimulate the economy. The low-interest rate goal was designed to help improve the economy’s overall health. However, economists assumed that the interest rate would increase in the future as the economy rebounded.
Increasing interest rates are, of course, not desirable to customers and business owners. However, interest rates show the economic health of the country.
Increased Competition In Business Lending
With the Federal Reserve increasing interest rates, there is a possibility of a supportive effect on business owners in the short term. Many banks are starting to increase their small business lending to companies.
After the 2008 Great Recession, many established banks stopped lending to small business owners. These banks believed that small business loans were high risk and provided low-profit margins.
With conventional banks avoiding small business lending, many online lenders have provided loans. These loans often come with a higher interest rate.
However, if established banks enter more into small business lending at a higher rate, there is more competition among lenders. The increase in competition should decrease the interest rate of the loans.
The decrease in the interest rate on small business loans might happen because online lenders and established banks would be fighting to provide loans to small business owners.
Small Business Loan For Business Borrowers
The Federal Reserve will likely continue to increase the interest rate affecting small business loan rates. It is vital to assess your business situation. If you are considering taking out a small business loan, consider preparing now instead of later with high-interest rates.
An increase in the federal interest rate does affect the small business lending industry. The interest rate for a business loan can be high. However, these factors can affect different small business owners because of their credit scores and economic status.
333funding is there to help you with your small business loan. With the Federal Reserve increasing interest rates, 333funding will work with you to receive an interest rate that ensures your business will avoid economic devastation.
You can call us at (702) 577-1099 or email us at info@333funding.com. You can also meet us at our physical office at 6375 S Pecos Rd. 224 Las Vegas, NV 89120.
