![]() ![]() As a result, your customer retention or acquisition rates could drop, lowering your overall revenue and sales. Depending on your business’s industry and customer base, your particular services or products could be the first expenses consumers cut from their lives. When finances are tight, people stop spending as freely and start eliminating certain purchases. When interest rates rise, the average person has to shell out more money to make the minimum payments on their student loans, car loans, and mortgages. Increased interest rates curb consumer spending If you can’t afford to take on short-term debt to bridge a cash flow gap or deal with an emergency, your business might struggle to get ahead. Even if you do get approved for a short-term loan, the interest rate may be too high to manage, setting you deeper into debt. When short-term financing solutions-like business lines of credit or business credit cards-have higher interest rates, you may need even higher credit scores to get approved. When interest rates go up, not only do long-term loans become more of a burden, short-term loans also become less accessible. Rising interest rates can prevent you from getting short-term credit Depending on your business’s overall financial health and profit margins, you might have less flexibility to invest in long-term growth-or less day-to-day cash flow stability. Rising interest rates make your business debt more expensive, which means you’ll have to use more cash to cover your interest costs. Increased interest rates can limit your cash flow ![]() Fluctuating interest rates influence how your business operates, how much revenue or sales you bring in, and how loyal and consistent your customers are. Whether you’re currently paying off a business loan or looking to apply for a loan, it’s important to understand how these increased interest rates could impact your plans.Ĥ ways higher interest rates affect your businessĬhanges to the economy have a ripple effect. The first interest rate hike could happen as soon as March 2022, according to experts, with multiple potential hikes planned after that. The Federal Reserve, the bank that dictates the rate of lending, plans to raise interest rates to deal with high inflation. ![]() Interest rates in the United States have stood at record-low levels since the onset of the pandemic-but that’s about to change. ![]()
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