How they affect short-term lending
By; Katherina Gorospe
When applying for short-term funding, it’s important to take the interest rates into consideration. While this does affect you and how well your business thrives, you should also know why these rates are always fluctuating.
As you keep track of your company’s revenue, the status of your sales tends to be a direct correlation of the ever-changing economy. To avoid inflation, short-term interest rates will rise as well.
Likewise, when the economy is moderate, those rates tend to fall so that lending is less expensive for business owners. While this means that owners can afford more, there is also a less likely chance of them needing a loan. But smart business owners know that this is prime time in obtaining a loan because this is when you can truly reap all the benefits.
While there are many aspects to owning a business, it’s hard to pinpoint how and when interest rates will affect your growth. With the constantly changing economy, you might find that the price of your services/goods doesn’t always follow suit, so it’s important to determine what factors suit your needs.
A change in price also means a change in how many customers come through the door, but keep in mind, you’re still a customer as well. Some business owners find it beneficial to stock up on the inventory they need, while others make cuts or find other ways to save money while making the same amount of purchases as usual.
Along with a change in sales, interest rates could also affect your receivables. If this is the case, you might have to strategize your pricing and adapt to the fluctuating market, depending on what your business requires.
It’s easy to fall under the impression that a fluctuation in interest rates are a setback for your company, but it can also be used to your advantage. A change in marketing could benefit your sales, as well as reaching out to a new demographic.
As a small business owner, you’ll find yourself needing to create a brand that’s adaptable to these varying factors. While there are no steady interest rates, nor is there a quick fix for it, plan for it now so you can see your company progress.