If you own a business, then you’ve undoubtedly heard about rising prime rates. And those predictions are in fact coming true, with the first rate hike occurring just yesterday, March 16, 2022. What does this mean for your organization, and how can you plan for success with increased interest rates in mind?

Addressing Rising Prime Rates

You may already know that increased interest rates affect every facet of the economy. People often associate this rise with changes in their mortgage or lines of credit, but small businesses also see an effect. Not only will this rise in interest rates affect your price for borrowing, but it’ll also affect the finances of the customers who frequent your storefront.

For your small business, rising prime rates mean that the cost of borrowing increases. This increase will affect any new lines of credit, credit cards, and small business loans, but it may not be limited to new borrowing. Increased interest rates will also demand more resources from a business with debt holding a variable interest rate. Owners should plan for new prime rates to raise their monthly payments on variable debt.

Understanding prime rates means understanding that interest rates also touch your customers. Rising rates are more likely to encourage saving as the monthly expenses go up. In order to afford their car or mortgage payments, your customers may have less money to spend each month on your product. You’ll need to keep this change in mind as a business owner and develop strategies to counter it.

A Response to Increased Interest Rates

If you’re considering borrowing for your business soon, you may want to do so quickly. Assessing your current capital and predicting your need is critical now more than ever. You should also work with an expert to secure the best rates possible for your business and keep them fixed for your success. To find the best solutions for your organization, work with Falcon National Bank. Contact us today to move your business forward.