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Rising Interest Rates: How SBA 504 Loans Can Help Your Business
Top Ways to Prepare Your Business for Rising Interest Rates
Rising Interest Rates

Top Ways to Prepare Your Business for Rising Interest Rates

Top Ways to Prepare Your Business for Rising Interest Rates

Interest rates in the United States are on the rise, and this can have large implications for small businesses, especially those thinking about or already benefiting from Small Business Administration (SBA) loans. 

One of the most advantageous types of these loans is the SBA 504 loan, which offers fixed-rate financing for major fixed assets, such as real estate, equipment, or construction. Here are the key steps to prepare your business for rising interest rates while harnessing the powerful benefits of an SBA 504 loan.

Already know you want to apply? Skip straight to the CDC business loans application by downloading this file.

How Do Low Interest Rates Affect A Business?

  • Increased Borrowing and Spending
  • Lower Debt Costs
  • Increased Consumer Demand
  • Higher Valuations
  • Better Competitive Edge

How To Take Advantage of Rising Interest Rates

1. Lock in Low Rates Now

The beauty of an SBA 504 loan is its up to 25 years fixed-rate feature. Since interest rates are expected to increase, securing your loan at the below-market rates can save your business a high amount of money over the loan term. By acting quickly, you can lock in a competitive rate and enjoy predictable monthly payments that allow for more accurate long-term financial planning.

2. Assess Your Financial Health

Before applying for an SBA 504 loan, get a solid understanding of your business’s financial health. This includes evaluating your cash flow, profit margins, and overall debt levels. Since CDC SBA loans involve both a bank loan and a CDC (Certified Development Company) loan, lenders will scrutinize your financials to check if you can manage the long-term debt.

3. Budget for Rising Costs

Even with a fixed-rate loan, rising interest rates may affect other expenses in your business. Review your budget to account for potential increases in costs related to supplies, utilities, and other variable expenses. A well-planned budget can help cushion the impact of these changes and keep your business on stable financial ground.

4. Explore Refinancing Options

If you currently have variable-rate loans, refinance them into an SBA 504 loan to benefit from a fixed interest rate. This can provide more financial stability and protect your business against future rate hikes. Refinancing with the help of a CDC small business finance organization can also potentially lower your overall interest expense, freeing up capital for other business investments.

5. Strengthen Customer Relationships

Higher interest rates can inspire less consumer spending, which may impact your business’s revenue. Fortify your relationships with existing customers by focusing on exceptional service and value. Building customer loyalty can help maintain steady revenue streams even during periods of economic uncertainty.

6. Plan for Long-Term Investments

With an SBA 504 loan, you can finance up to 90% of your project costs, making it an excellent option for significant investments like property acquisition or major equipment purchases. Use this opportunity to plan for long-term growth projects that can boost your business’s operational performance and competitiveness. 

For closer help with a Certified Development Company in VA, NC, SC, and MD,

 Contact 504 Capital Professional in your community

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