The Fed’s goal is to bring inflation down to just 2%. They’ve been unsuccessful in that goal for a couple of years now, but hey, they’re still keeping an eye on the situation. While we all sit around waiting for the stars to align, if you’re a small business owner you might have a bit more urgency than the Fed seems to have. So where are we now, and what should you do about it?
Here are Five Fast Facts about small businesses borrowing money when interest rates are high:
- 🤡 This Is The Year…Just Kidding - The conventional wisdom going into 2024 that inflation was easing so rates should start coming down. It obviously still hasn’t happened yet. Even more importantly, the head of the Fed is downplaying talk of rate cuts. No need to read the tea leaves here, it’s just not happening anytime soon.
- 🔍 Outlook (Not The Microsoft Kind) - The experts tell us that job gains are strong, unemployment is low, and growth is still happening. These are the same experts who told us inflation would be down and rates would follow, so there’s that. But maybe they’re a bit humbled now because they’re also saying the economic outlook is “uncertain” so they’re not making any big changes right now.
- 🚀 If You Can Grow…Go Go Go! - If everything is stuck treading water, then what do you do? First, if you see the chance to grow your business, just do it! Don’t wait on better rates because no one knows when they’ll come back. Think about the opportunity cost - what do you lose if you don’t move now (even if rates aren’t great)?
- 🧮 Comparison Shopping - Always shop around. No matter what the overall rates are, there will always be variation in the specific terms from different lenders. Even if your credit is in the crapper, there are usually non-bank lenders who are willing to play ball. You might pay more, but at least you can get it done.
- ✂️ Cut The Fat - It’s never a bad thing to trim the excess out of your business, and when preparing to get financing is a great time to get into financial shape. The better your bottom line, the more likely you’ll find a good deal. Can you reduce inventory, renegotiate existing deals with suppliers, or find new suppliers with better pricing? Do it!
🔥Bottom line: It’s tough to be a small business right now! Surviving the COVID shutdowns was no small thing (WAY TO GO!!!), but borrowing in the current environment is tough for many reasons. If you’re careful and map it out, you can make it work for you.
Do you own a small business?
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