Close this search box.
Blog » Money Tips » 4 Things to Consider Doing Before Interest Rates Rise Higher

4 Things to Consider Doing Before Interest Rates Rise Higher

money habits

When the Federal Open Market Committee (FOMC) meets a little later this month, many expect to see slightly higher rates. The Fed has been raising rates slowly over the last year or so. And, as long as the economy continues to recover, policymakers are likely to keep on this path.

As you look to position your business finances, it’s important to consider the impact of higher rates. Here are some things to consider before interest rates rise even higher in the next couple of years:

1. Review Your Current Loans

Do you have variable rate loans? It’s common for businesses to get financing. However, when interest rates rise, you run the risk of paying more to your lender. In order to avoid getting hit with bigger interest charges, it might make sense to refinance your loans to a low fixed rate.

Variable rates can mean higher payments, eating into the money you can use for your business. Getting a fixed rate loan before rates rise can be a solid business move.

2. Now Might Be the Time to Buy

Have you been thinking about buying real estate for your business? If so, now might be the right time to buy. Mortgage rates are expected to head higher as the economy picks up and as Fed decisions influence Treasury rates. Now could be the time to lock in a fixed-rate mortgage on a piece of business real estate.

One strategy might be to buy an office building, locate your own business in one of the units, and then rent out the remaining units to other businesses. This can be a great way to improve cash flow while owning business real estate.

Only take the plunge if you know you are ready to buy for your business, though.

3. Cash Out Some of Your Equity

Do you already own business real estate? If you have equity, it might not be a bad idea to take a low-rate fixed loan out against it and use the money to pay off a variable rate loan or to invest in your business. For business owners who know they will expand in the next couple of years, but need a little more capital to make it happen, making this move now, before interest rates rise, can be smart.

Make sure to carefully consider your situation before moving forward, though. Once you take out that equity loan against some of your property, you could end up losing it if you fall on hard times and can’t make your payments.

4. Look to the Small Business Administration

Don’t forget about the Small Business Administration (SBA). If you need a little extra capital to buy equipment, the SBA has its 504 program. You can use this program for refinancing and real estate purchases, if you qualify. It’s possible to access financing with 10% down, and you can get a low-interest loan. The terms are long, and that’s good news if you need affordable payments for your loan.

In the end as interest rates rise, you need to be ready. Prepare your business now by making smart financing decisions.

About Due’s Editorial Process

We uphold a strict editorial policy that focuses on factual accuracy, relevance, and impartiality. Our content, created by leading finance and industry experts, is reviewed by a team of seasoned editors to ensure compliance with the highest standards in reporting and publishing.

Credit Expert
I’m Miranda and I’m a freelance financial journalist and money expert. My specialties are investing, small business/entrepreneurship and personal finance. The journey to business success and financial freedom is best undertaken with fellow travelers.

About Due

Due makes it easier to retire on your terms. We give you a realistic view on exactly where you’re at financially so when you retire you know how much money you’ll get each month. Get started today.


Top Trending Posts

Due Fact-Checking Standards and Processes

To ensure we’re putting out the highest content standards, we sought out the help of certified financial experts and accredited individuals to verify our advice. We also rely on them for the most up to date information and data to make sure our in-depth research has the facts right, for today… Not yesterday. Our financial expert review board allows our readers to not only trust the information they are reading but to act on it as well. Most of our authors are CFP (Certified Financial Planners) or CRPC (Chartered Retirement Planning Counselor) certified and all have college degrees. Learn more about annuities, retirement advice and take the correct steps towards financial freedom and knowing exactly where you stand today. Learn everything about our top-notch financial expert reviews below… Learn More